HC Deb 27 November 1974 vol 882 cc183-4W
Mr. Skeet

asked the Secretary of State for Energy if he is satisfied that firms operating in the North Sea will be able to finance exploration of other areas on the Continental Shelf, bearing in mind the need to raise funds and the time factor involved before production is secured, if petroleum revenue tax operates on a field by field basis.

Mr. John Smith

My right hon. Friend the Paymaster-General said in the Budget debate—[Vol. 881, c. 543.]—that there would be relief for abortive expenditure. It is intended that each participator in a field should be able to claim for abortive exploration or development expenditure incurred by him, or a company in his group, against any subsequent PRT assessment or determination made on him.

Mr. Skeet

asked the Secretary of State for Energy if he will take special steps to enable small oilfields to remain viable if PRT is imposed at a flat rate and companies are exposed to the risk of producer Governments abroad cutting posted prices.

Mr. John Smith

As my right hon. Friend the Paymaster-General said in the Budget debate—[Vol. 881, c. 546.]—the Government are conscious of the need not to deter investment in the marginal field. Their objective will be to arrange, in the light of the information provided during the present discussions with the oil companies, that the combined effect of the fiscal and other measures in contemplation makes allowance for this problem.

Mr. Skeet

asked the Secretary of State for Energy what he estimates the value of uplift on capital expenditure items specified in Clause 3(4) of the Oil Taxation Bill to be expressed in terms of interest rates.

Mr. Robert Sheldon

I have been asked to reply.

This depends on the loan repayment terms, and the relationship between capital expenditure and the flow of receipts in particular cases. In general, the uplift should be broadly equivalent to a deduction for actual interest paid.

Mr. Skeet

asked the Secretary of State for Energy on the assumption of a Government take of 80 per cent. on North Sea oil through petroleum revenue tax and corporation tax, what would be the overall take including excise taxes and VAT on the proceeds of a barrel of oil.

Mr. Robert Sheldon

I have been asked to reply.

It is not possible to give a meaningful reply without knowing the price at which the crude oil is to be sold, the products into which it is to be refined and the uses to which they are put, the capital and current operating costs of the field and the overall tax position of the company.