Will Scotland's oil and gas contracting industry survive the ending of the Petroleum Revenue Tax?

In the March 1993 budget the Chancellor of the Exchequer proposed the phasing out of the Petroleum Revenue Tax. All fields receiving development assent after March 1993 will now pay no tax apart from Corporation Tax at 33%. PRT for existing fields is reduced from 75% to 50%. At the same time companies will no longer be able to offset exploration and appraisal expenditure in one field against tax liabilities accruing from other fields in the North Sea (some form of transitional relief will be available till 1995). The changes are seen in general to be prejudicial to an industry already finding it difficult to cope with declining real oil prices in an ageing oil province with internationally high production costs. The specific focus of this article is the impact which any such decline will have on the contracting and supply industry which has grown up to service North Sea oil production.