UK govt oil revenues fall 70% as price crash and decommissioning take effect

UK revenues oil decommissioning crash
Gulf
  • Date: 07/22/2021
  • Source: Energy Voice
  • Sector: Economy
  • Country: Gulf

UK govt oil revenues fall 70% as price crash and decommissioning take effect

UK government revenues from oil and gas taxes have plummeted by more than 70% due to effects of the recent price crash and decommissioning repayments. Total government revenues from production were £248million in the 2020 financial year, down from £900m in the previous period, according to HMRC. 2020 was the worst year since 2016 for government revenues, which saw losses of £400million as knock-on effect of the 2014 downturn. International benchmark Brent crude plunged to a 21-year low in April 2020, while West Texas Intermediate in the US went into negative value. The reduced fuel demand played a major role on the Exchequer’s receipts. Petroleum economist professor Alex Kemp of Aberdeen University said the results “are not unexpected”, adding that even with the oil price rebounding to around $70 in recent months, the Treasury “shouldn’t expect any bonanzas”. “At that level, we would expect some new investments to go ahead but that would mean they carry capital allowances against taxable income, which would mean that even with some increase in investment over the next year or so, the tax revenues wouldn’t bounce up very strongly.” The impact of decommissioning spending, which reduces profits and therefore the tax take, is also…