‘Get real and reform tax,’ industry chief tells today’s N. Sea jobs summit in Aberdeen

 

North Sea oil: Deep difficult and expensive
North Sea oil: Deep difficult and expensive

An ‘unpredictable and harmful business environment’ has put the UK’s valuable oil and gas industry ‘at great risk’ and that realism about the continuing prominence of oil and gas in the UK’s energy supply should be a guiding principle in future policy decisions.

That’s the key message for today’s Aberdeen oil and gas jobs summit from the chief of the London-based trade association, UK Oil and Gas.

Aiming his message direct at Nicola Sturgeon MSP, First Minister of Scotland, and Alistair Carmichael MP, Secretary of State for Scotland, Malcolm Webb will say: “Britain’s great oil and gas industry has over the last four decades overcome challenging geology and volatile commodity prices to provide hundreds of thousands of high skilled jobs, generate hundreds of billions of pounds in tax revenues and foster innovation.

“However the inconsistent and unpredictable government policy it has faced, now combined with sharply rising costs and a sudden drop in oil price, has dealt a blow which is doing real and potentially long-lasting damage.

“We in the UK must all wake up to the fact that our reliance on oil and gas for our transport, heating and electricity needs, which currently sits at 73% of total energy, is not going to wane for several decades yet.

“In stark contrast to the many benefits of producing our own indigenous oil and gas, importing energy does not support high skilled British jobs or the public purse and damages the country’s balance of trade and exports of goods and services.

“If we are to avoid lasting damage to this industry and its £35 billion supply chain, now is the time for meaningful action. The industry is having to take tough decisions and implement necessary cost reduction and efficiency improvement measures.

“Alongside this, the Department of Energy must proceed as quickly as possible with the full establishment of the new Oil and Gas Authority, and HM Treasury must radically reduce the tax burden on this mature oil and gas province. We at Oil & Gas UK would also support the suggested City Deal for Aberdeen city and shire.”

Also speaking ahead of today’s summit at Aberdeen’s exhibition centre – where the Scottish Government will meet with the UK Government, industry leaders and trade unions – First Minister Nicola Sturgeon said: “This summit is an important opportunity for joined up action from industry leaders, unions and government to ensure the industry has the brightest possible future.

“The North Sea has made an enormous contribution to both the Scottish and UK economies over the last 40 years and I am certain this will continue for many years to come.

“However, it is vital that for the industry to succeed in the decades ahead we need fiscal and regulatory change in the oil and gas sector.

“In the short term, that means urgent action on taxation to give the industry the certainty and security it needs to protect jobs and investment. It is essential that the tax reductions are sufficient to instil investor confidence, as without that maximised recovery will not be achieved.

“This is because the extra investment needed for smaller fields, ageing infrastructure as well as much more exploration and appraisal is only going to be made by operators with substantial tax reductions.

 “Investors need a strong signal that the North Sea is open for business and they need that signal now.”

Councillor Jenny Laing said: “Aberdeen council called the summit because it is vitally important that the UK and Scottish Governments, industry representatives, trade unions and experts in the field come together to address the falling oil price.

“The impact of plummeting prices on thousands of jobs in Aberdeen and the surrounding region is potentially very serious. We need to take a lead to bring together decision-makers and academics to come up with meaningful responses to the situation.”

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