§ Mr. David Porter
To ask the Chancellor of the Exchequer what effect he expects his changes to petroleum revenue tax announced in the Budget to have on the gas and oil industries both onshore and offshore in the southern North sea sector; and if he will make a statement.
§ Mr. Dorrell
To the extent that existing production in the southern basin is within the charge to petroleum revenue tax, doubling the investors' marginal share of profit should encourage investment in, and extend the life of, fields. Removing the burden of PRT from fields currently without development consent will both increase after-tax costs and increase after-tax profits that would have been subject to PRT, so companies will have greater incentives to undertake commercially-viable investment.
The measure involving a small change to PRT, but principally ending liability to gas levy in certain circumstances, is a direct response to an industry request and should remove a disincentive to significant further production. Taken together, those measures clearly improve incentives for development investment, which should prove beneficial to the offshore industry and its onshore support.