Against the ongoing slump in North Sea crude oil prices – the Brent benchmark has sunk some 60% since Jun 2014 while the UK industry has shed 65,000 jobs – the Scottish Energy Minister has today demanded a guarantee that the UK government will not raise industry taxes for the next five years.
Speaking to Holyrood MPs, Fergus Ewing called on the UK Government to make good on its commitment to consult on further measures to help the North Sea oil and gas industry, and to ‘at last’ take action on protecting the stability of the oil and gas fiscal regime – something the Scottish Government has consistently called for.
While recent industry estimates say there is still up to 22 billion barrels of oil and gas to be extracted, the Scottish Government believes that a range of industry challenges and a low global oil price suggests a different approach to fiscal policy is required that fully reflects the principle of Maximising Economic Recovery (MER). Ewing also called for
- an urgent consultation on incentives to boost exploration in the North Sea;
- a clear timetable for the government to consult on options to improve access to decommissioning tax relief and for reforming the fiscal treatment of infrastructure; and
- a commitment that there will be no tax increases for the industry for the whole of this UK Parliament, and that any significant policy proposals will be consulted with industry and the Oil and Gas Authority.
The Minister added: “With Oil & Gas UK figures show production starting to increase and operating costs starting to fall, there is much more is needs to be done by both industry and the UK government.
“While the Scottish Government continues to take action to support the sector, the UK Government has yet to fulfil its commitment to further consultation with the industry during 2015 on options to support exploration, decommissioning and critical infrastructure.
“I have already called on the UK Government to bring forward these consultations – a commitment it made 10 months ago – to enable the industry to commit to the investment required for this sector to prosper for many decades to come. I reiterate those calls today: now is the time for action”.