Insight
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6 Pages

Decommissioning: the UK's US$66 billion headache


Decommissioning: the UK's US$66 billion headache

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.


What's included?

This report includes 2 file(s)

  • Decommissioning: the UK’s $66 billion headache PDF - 283.42 KB 6 Pages, 0 Tables, 3 Figures
  • UKCS Decommissioning tax relief.xls XLS - 229.50 KB

Description

This Upstream Oil and Gas Insight report highlights the key issues surrounding this topic, and draws out the key implications for those involved.

This report helps participants, suppliers and advisors understand trends, risks and issues within the upstream oil and gas industry. It gives you an expert point of view to support informed decision making.

Wood Mackenzie's 500 dedicated analysts are located in the markets they cover. They produce forward-looking analysis at both country and asset level across the globe, backed by our robust proprietary database of trusted research.

Proprietary data means a superior level of analysis that is simply not available anywhere else. Wood Mackenzie is the recognised gold standard in upstream commercial data and analysis.

  • Executive summary
  • Overview
  • The size and timing of the decommissioning market
    • Cost estimates for decommissioning
      • Timing of decommissioning
    • Is the service sector ready?
  • Laws and regulations
    • International obligations provide clear rules on the removal of facilities
    • National obligations
  • Fiscal rules
    • Ring Fenced Corporation tax and Supplementary Charge
    • Petroleum Revenue Tax
    • Decommissioning relief deeds (DRD)
      • Non-Default
      • Default
      • Implications for UK based oil & gas companies
      • Outlook
        • Is the UK Government able to sustain decommissioning tax relief?

In this report there are 3 tables or charts, including:

  • Executive summary
  • Overview
    • Tax receipts 2009 - 2016
    • UK plc total decommissioning spend vs tax relief
  • The size and timing of the decommissioning market
  • Laws and regulations
  • Fiscal rules
    • Future UK abandonment tax relief (top 20 companies)
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Wood Mackenzie, a Verisk Analytics business, has been a trusted source of commercial intelligence for the world's natural resources sector for more than 40 years, empowering clients to make better strategic decisions with objective analysis and advice.

We work across every sector of oil, gas, power, renewables, chemicals, metals and mining, covering more than 150 countries. Our proprietary data and models are at the core of everything we do, ensuring our independent asset and company valuations are thoroughly robust and that we offer an accurate forward-looking view of economic indicators such as market supply, demand and price trends.

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