Public cost of decommissioning oil and gas infrastructure Contents


The UK’s offshore oil and gas reserves are running out. As a result, oil and gas companies are increasingly decommissioning assets that are no longer extracting resources profitably. Decommissioning means plugging and abandoning wells and removing structures, such as platforms, to return the seabed to its natural state as far as possible in accordance with international regulations. Oil and gas companies have spent more than £1 billion on decommissioning in each year since 2014. The OGA expects decommissioning to cost between £45 billion and £77 billion overall, with most expenditure in the next 20 years. HMRC estimates that taxpayers will contribute £24 billion to the cost of decommissioning through tax reliefs. Taxpayers are additionally liable for the cost of decommissioning assets that oil and gas companies cannot afford to decommission themselves. The Department has overall responsibility for the safe, cost-effective and environmentally sensitive decommissioning of offshore oil and gas infrastructure. In 2015, it established the OGA to work with oil and gas companies to reduce the overall cost of decommissioning. The Department also monitors the financial health of oil and gas companies and can require companies to set aside money to pay for future decommissioning if it thinks there is a risk of the bill falling to taxpayers.

Published: 27 March 2019