Although oil and gas production declined by 18 percent last year, capital investment is expected to increase by a record 35 percent to $18.3 billion in 2012. In addition, exploratory drilling is expected to rebound from a low of 15 wells to at least 25. A surprise UK tax increase passed last year raised the rate on oil and gas producers from 20 to 32 percent, which prompted a major outcry from the oil industry. In addition, the oil industry fears that the scheduled decommissioning of oil infrastructure first installed in the 1970s will complicate oil production because the UK is likely to impose tougher environmental regulations on new infrastructure and equipment.
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