Seems that HM Treasury has made a concession following the debacle of unexpectedly moving the goalposts for UKCS focussed oil and gas producers and explorers:

The Government today announced that the annual rate of the Ring Fence Expenditure Supplement (RFES) for the North Sea fiscal regime will be increased from 6% to 10%, following discussions with industry initiated at the 2011 Budget...

...In the course of those discussions with industry, the Government has identified that the ability of a company to benefit fully from the field allowance is dependent on whether a company has sufficient current taxable income against which to off-set expenditure. This is addressed to some extent by the Ring Fence Expenditure Supplement, which currently allows companies with insufficient taxable income to uprate losses by 6% for six accounting periods.

The increase to 10% announced today will help ensure existing field allowances work more effectively and equitably to support investment in marginal fields. It also brings RFES in line with the discount rate typically used by the sector...

I'm not enough of a tax expert to understand the full implications of this, but industry seems to be viewing it positively. According to the FT:

Statoil, the Norwegian energy giant, will resume its development of a North Sea oilfield holding 430m barrels after the Treasury announced extra help for companies subject to a recent tax increase...

...“The negative impact from the tax increase proposed in March has been neutralised for the Mariner investment and the project is now back on track,” said a Statoil spokesman...

Deo Petroleum (LON:DEO) has also welcomed the proposal.

Mark

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