Politics: Taxpayer faces bill of pounds 5bn for rigs' disposal

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The Independent Online
THE TAXPAYER faces a bill of up to pounds 5bn to subsidise the oil industry's disposal of around 250 oil and gas rigs, some of which might be dumped in the sea.

The disclosure that the taxpayer will pick up part of the bill for the clean-up, through tax relief, over the next 25 years led to protests at the Commons last night from Matthew Taylor, the Liberal Democrat environment spokesman, over an alleged betrayal of Government promises.

A Greenpeace spokesman attacked the taxpayers' subsidy for the gas and oil industry. "Having the taxpayer pay for cleaning up the mess caused by the gas and oil industry is outrageous," he said.

Margaret Beckett, the President of the Board of Trade, said in a written Commons reply to Mr Taylor that gross decommissioning costs for the 250 rigs over the next 25 years were estimated to be in the range of pounds 7bn to pounds 10bn at current-day prices. "The Inland Revenue estimates that around 50 per cent of the costs will be met by the Exchequer through tax relief," she added.

The peak years for decommissioning the rigs will be between 2003 and 2012. The Independent revealed that around 60 could be dumped at sea. Mrs Beckett did not confirm the number but said the "great majority" would be brought onshore for re-use, recycling or disposal.

However, the Government was assessing the heavy steel rigs in deeper water on a case-by-case basis "with decisions based on solid analysis and in the light of open and transparent consultation".

Mr Taylor said Michael Meacher, the Environment Minister, had said last year there would be no more "Brent Spars" - a reference to the rig which was to be dumped at sea until Greenpeace led protests across Europe, using pollution claims which were later challenged.

The Liberal Democrat MP said dumping oil rigs at sea would be a "complete betrayal" of numerous promises to protect the North Sea. "It is a little dubious that the oil industry should be getting the taxpayer to pay the bill for cleaning up the mess they have left," he added.

Mrs Beckett said decommissioning costs generally qualified for tax relief under the normal Petroleum Revenue Tax and Corporation Tax rules. Royalty relief is currently available where royalty has been paid on the licence, she said.

The Government's policy for disposing of the rigs was based on a presumption in favour of land disposal except where, taking account of the environment as a whole, such a course was neither safe nor practicable.

Greenpeace said it believed the total cost of decommissioning had been deliberately inflated by the oil industry because they wanted some dumping at sea, which was the cheaper option.