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Decommissioning: the UK's US$66 billion headache

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Report summary

Decommissioning is arguably the single biggest issue in the minds of those interested in UK oil and gas right now weighing on operators oilfield services companies prospective asset buyers and sellers. In total Wood Mackenzie estimates future decommissioning spend from 2017 onwards at 53 billion (US$66 billion 2016 terms) with 11 billion (US$19 billion) expected to be spent over the next five years. There are a number of uncertainties surrounding this market from fundamental questions such as how much will it cost when will it happen through to what happens if someone defaults on their liabilities. There are mercifully some certainties in the decommissioning sector. The UK has stringent regulations that set out the obligations of what needs to be removed how to handle companies defaulting on obligations and decommissioning relief deeds (DRD) which guarantee the rate of tax relief.

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    Decommissioning: the UK’s $66 billion headache

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Tables and charts

This report includes 3 images and tables including:

Images

  • Tax receipts 2009 - 2016
  • UK plc total decommissioning spend vs tax relief
  • Future UK abandonment tax relief (top 20 companies)

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