Global Competitiveness

Global Competitiveness

The competitiveness of the UK has been monitored by Wood Mackenzie, the oil and gas industry consultants for many years. Their latest published analysis covers new developments based on exploration activity over the period 1994 – 2003. The study looks at a wide range of measures of economic competitiveness; however, it is best to focus on the ability of the UK to attract exploration investment when considering the impact of the tax increase.

Expected Monetary Value (EMV) measures the success of exploration taking into account the impact of the tax regime, costs of development and risks of exploration failure. The following chart compares the UK against other countries of similar maturity or with similar types of fiscal regime. It is clear that even before the latest tax increase, the UKCS only just remains competitive for future investment.

Figure 45: Full Cycle EMV – Comparison UK and Competitor Provinces

On a comparison of tax rates, the UK is seen to have become less competitive against all of the countries cited above as a result of the tax increase. This becomes more pronounced when the average size of discoveries is considered.

Figure 46: Comparison Tax Rate and Average Discovery Size 2005