The gas and offshore oil industry has urged the UK government to raise incentives for the North Sea exploration to recover 25 billion barrels of oil and gas. Oil and Gas UK, representing the offshore industry points out that though companies have planned to invest £21bn in the next five years for recovering 2.7 billion barrels of oil and gas in addition to 7.1bn, additional investment will be needed to recover rest of the fuel. Oil and Gas UK further states that industry’s operating costs have doubled and the cost of producing a barrel of oil has increased fivefold.

The industry spent £12.4bn on exploration, development and production. But it spared only small sum of £4.9bn for bringing new reserves into production compared to £5.5bn it spent a year ago. Malcolm Webb, Oil & Gas UK’s chief executive, considers maximising recovery of oil and gas reserves as a matter of national importance and adds that the importance is well understood by government at the highest level.

He emphasizes that barrels left in the ground do not pay tax, do not sustain jobs, do not fulfil nation’s energy needs and provide no support to country’s balance of payments. Mr. Webb is looking forward to continue dialogue with the Treasury on ways to improve competitiveness of UK oil and gas basin and how the incentives will help recovery of huge reserves of oil and gas in the North Sea.

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