Oil and gas contractors form a key element of the expertise and skills underpinning the UK oil and gas sector. And, according to a new report, Oil & Gas UK’s 2012 Economic Report, the UK’s offshore sector makes a ‘vital’ contribution to the UK economy. However, the report notes that the UK’s taxation policy has some way to go to keep the sector growing.
“The UK oil and gas industry’s economic contribution is to be celebrated and supported, especially in the current challenging global environment,” says Oil & Gas UK’s chief executive Malcolm Webb. “It is providing extra jobs and placing orders with companies across the UK supply chain, as well as supporting exports and tax revenues.”
The scale of the contribution made by the sector, and the contractors working within it, to the UK economy is illustrated by the tax revenues it contributes to the exchequer: £11.2bn in direct taxes on production and an additional £6bn in corporation tax, income tax and National Insurance Contributions (NICs), in part contributed by contractors.
An additional insight from the report is the size of the offshore industry’s supply chain, which encompasses most core contractor disciplines, including engineering, science and technical, IT, construction, interim management, marketing and media, finance and additional areas.
However, Webb highlights that to secure ongoing investment, which generates an estimated 20,000 new contracts and jobs for each £1bn invested, there must be greater certainty in the UK tax regime: “Following a period of sustained fiscal uncertainty, the industry is now more confident that the Government recognises the unshakeable link between fiscal predictability and investment, production, jobs and tax revenues.
“With continued investment in exploration for and production of this vital national resource, the significant economic benefits this country reaps from oil and gas activities can flow for a long time to come. The right tax system, however, is a crucial driver and on this, there is more to do,” he adds.
Oil & Gas UK represents over 250 companies, including those licensed by the government to explore for and produce oil and gas in UK waters, as well as others who form part of the industry’s supply chain. Among the 250 companies are numerous major oil and gas contractor clients.