The development of new cost-effective techniques for exploration and production is essential for the optimum exploitation of oil and gas resources both on the UK Continental Shelf (UKCS) and worldwide.

The United Kingdom Offshore Operators Association issued a fact sheet in June 1987 in which it was estimated that total annual spending, from all sources, on offshore-related research and development in the UK is in the region of £10Ck140M These are significant figures, but when you consider that the annual market for the supplies of offshore goods and services has averaged £2 3-2 4Bn over the last five or six years on the UKCS-it becomes a very worthwhile investment.

In the same fact sheet, the Minister of State for Energy, stated ‘As we look forward to the discoveries and developments of the next decade, it is clear that the essential element is R and D Only a sustained, determined search for advances in technology which will solve technological problems, reduce costs and maintain close attention to safety, will ensure the full exploitation of our oil and gas resources’

Development of new technology requires two key ingredients

  • the innovative idea,

  • the funds to undertake the work

This paper deals with the latter

There are a number of sources of funding-direct and indirect-which are available worldwide for the development of new products and techniques for use in oil and gas technology This paper does not purport to cover them all nor can it vouch for the accuracy of all of the text, as the criteria for schemes change from time to time Whilst every effort has been made to ensure that the information was correct at the time of preparation, companies interested in any source of funding listed are advised to contact the organization listed

As some new techniques may have a wider application than the oil and gas market, the paper attempts to cover some possible sources of funding which are not specific to oil and gas technology

R AND D SUPPORT

There are two main types of support indirect and direct Indirect support is mainly in the form of fiscal relief, while direct sources are much more varied and can be repayable or be in the form of a grant

UK FISCAL RELIEF

It must be stressed that there is no simple guide to tax relief for offshore and R and D projects Enquiries about whether expenditure specific to R and D projects qualifies for tax relief should be made direct to the Oil Taxation Office Offshore R and D expenditure may qualify for relief for the purposes of

  • corporation tax (CT),

  • petroleum revenue tax (PRT)

Whether research costs are relieved under the CT rules will depend on

  • the nature of the costs, and

  • in cases involving a subsidiary company, the way in which a group's research is carried out and how the costs are allocated.

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