Tax Break – UK Leads to £3bn Gas Project in the North Sea

Maersk is an energy group from Denmark and will be leading a £3bn project aimed at developing the largest gasfield which has been discovered in the North Sea for a decade. This is the first big investment which will be benefiting from the tax breaks in the UK which was announced in the Budget.

The Culzean field is located in the middle of the North Sea, and we can expect it to produce enough gas to meet the needs of 5 per cent of demand in the UK by 2020-21 when it is due to reach peak output. This is the biggest gasfield to receive the go-ahead for development since 1990.

This news comes as a boost for the North Sea, which is a high-cost region dealing with a long-term production decline. The area was hit hard as oil prices collapsed, falling from over $115 a barrel to around $50.

Chancellor George Osborne aimed to breath new life into the area when he announced a large tax cut worth £1.3bn in March this year. Mr Osborne said the cuts are a “clear signal that the North Sea is open for business”. The rescue package also includes a simplified investment allowance which will enable companies to claim back the costs associated with new spending.

Culzean will be supporting approximately 6,000 jobs, and directly creating more than 400 jobs. The investment allowance is 62.5 per cent of the expenditure and from April 1 it can be set against profits which are subject to the supplementary tax rate. This means that high-pressure and high-temperature projects like this will be supported and more likely to go ahead. Excellent news for both the region, and job seekers.