Carole Nakhle Comment on North Sea Consultation 2008

North Sea Consultation Response by Dr Carole Nakhle February 2008 The Consultation document published by the Treasury in December 2007 is a welcome contribution to the further reform of the UKCS fiscal regime. The industry has complained in the past about unexpected changes in fiscal terms, and the deterring impact that the instability of the fiscal regime inevitably creates. Consultation and dialogue are the preferred framework to introduce fiscal reforms. No one expects fiscal regimes to be cast in concrete forever; indeed the regime must evolve to reflect maturity and competitiveness as well as ensuring the nation secures the right share of its reward from the exploitation of a national resource. Conditions change and certain flexibility should be allowed to take those changes into consideration, such as the evolution of the production, oil and gas prices, cost structure, profile and basin competitiveness. But on the other hand, regime modifications should not be on too frequent a basis nor undertaken without advanced warning, as they can, and do, negatively affect investors’ confidence. The process of consultation with the industry has clearly delivered positive results and this represents a material improvement in the relationship between the industry and the Government. This is best characterised as work in progress as further reform is undoubtedly required if the UK Government is to be successful in securing the maximum economic ...