The Influence of Existing Tax Systems on New Oil and Gas Projects in Western Europe

<p style="text-align: justify;">This paper is devoted to the subject of oil and gas tax systems in Western Europe, as well as to the topic of their optimization. At present development of the North-Western European continental shelf is sluggish owing to insufficient investment incentives for oil and gas companies at the initial stage of production. Due to the depletion of the resource base and low degree of exploration in the region and possible institutional changes in the UK there is an urgent need to modify the existing fiscal regimes of hydrocarbon production. The purpose of this work is to determine how and to what extent the Norwegian and UK governments should use different legal instruments of oil and gas taxation in order to solve these problems and remain industry leaders. In this regard, particular tasks of the research are as follows: 1) to examine the existing oil and gas tax regimes of the developed European countries, such as Norway and the UK, and compare them; 2) to evaluate technical and economic aspects of new oil and gas projects in these countries; 3) to propose efficient methods of modifying the Norwegian and UK energy legislation. The fact that the present paper covers the latest trends in the European taxation of hydrocarbon production determines the novelty of this research. The references used in this work comprise industry reviews, reports of international energy organizations, periodicals, news announcements made by reliable media outlets and statistical data provided by national economic organizations. Finally, the findings of the paper cover the legal mechanisms which the Norwegian and the UK governments can apply in order to improve the efficiency of their continental shelf fiscal regimes, such as enhanced capital allowances, immediate write-off for exploration costs, subsidy payouts, additional tax exemptions and tax reliefs for certain marginal oil and gas fields on the continental shelf.</p>