§ Mr. ChidgeyTo ask the President of the Board of Trade if she will make a statement on the current oil and gas royalties system. [49967]
§ Mr. BattleThe Petroleum (Production) Act 1934 empowers the Crown to receive royalties arising from oil and gas under the soil. These onshore rights were extended offshore in 1964. Royalty, at a rate of 12½ per cent. of the value of petroleum won and saved (less an allowance for eligible conveying and treating costs), is currently payable only in respect of production from fields for which development consent was given before April 1982.
In his 1998 Budget, on 17 March 1998, Official Report, columns 1097–112, the Chancellor announced that the Government would formally consult the oil industry on specific proposals to change the fiscal regime for companies involved in the extraction of UK oil and gas. The Government intend shortly to issue a consultative document on the North Sea fiscal regime. An outline of the options for change has already been published in an Inland Revenue press release issued on Budget Day. As explained in that press release, one of the options is the abolition of oil and gas royalty. This option is intended to encourage companies to exploit more fully the reserves of older oil and gas fields, and responds to representations made by some companies.