UK oil industry body OGUK warns that higher capital investment in the UK’s offshore last year disguises the long-term impact of last year’s budget, which imposed a harsher tax regime on oil and gas producers. While capital investment in the UK’s offshore rose by 42pc to ￡8.5bn ($13.6bn) in 2011, OGUK says this spending is dominated by big projects such as the Total-led Laggan-Tormore and BP-led Clair Ridge. Smaller brownfield projects risk being rendered unviable by the current tax regime, under which the supplementary charge on oil and gas production profits rose to 32pc from 20pc last year. And exploration drilling fell by 50pc in 2011 from a year earlier, with just 15 wells drilled, the lowest since the mid-1960s.
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