Commenting on Chancellor George Osborne’s failure to use his budget to address the concerns of the oil industry on the issue of bareboat charters – concerns which have risen due to his plans announced earlier this year – Scottish Energy Minister, Fergus Ewing, said:
“The UK Government has a history of making damaging changes to the oil and gas fiscal regime and yesterday’s budget proves that that damaging record continues.
“The plans will have an adverse impact on the industry, reducing the availability of rigs only weeks after Oil and Gas UK flagged this as a key concern in their 2014 Activity Survey. It will also leading to a significant increase in the costs of production with the potential to destabilise future investment plans and undermine industry confidence in a similar way to the tax increases in 2011.
“The UK Government’s failure to address this important issue comes on the very day that PriceWaterhouseCoopers informed the Scottish Parliament of the negative impact it was having on the oil and gas industry. They said the industry should not be treated as a “cash cow” and it was being “picked on”.
“In order to maximise the return from our oil and gas resources we need the appropriate business conditions for investment in exploration, appraisal and development. That’s why we appointed an Independent Expert Commission on Oil and Gas in September 2013, chaired by Melfort Campbell. The Expert Commission will bring forward specific proposals in relation to the North Sea fiscal regime and will report in the Spring.
“To date the North Sea has suffered from poor stewardship from the UK Government, and the time has come to address that. The decisions of successive Westminster governments to spend Scottish oil revenues rather than invest a proportion of them has been a major lost opportunity.
“There has been much uncertainty for the industry with 16 changes to the fiscal regime in a decade and a conveyor belt of 14 oil ministers in the last 17 years. With the full powers of independence, Scotland will be able to provide much better management and deliver the necessary fiscal and regulatory conditions to allow the industry to innovate and thrive.
“I welcome the UK Government’s announcement that it will fully support all of the recommendations of the Wood Review. Sir Ian’s proposal for a stronger, more effective regulatory body, if implemented quickly, can bring enormous progress in the recovery of oil and gas in the North Sea. Given that Europe’s Oil and Gas capital is in Aberdeen, I believe that this is the only conceivable location for that new body.”