The UK oil and gas trade body last night issued an urgent plea for ‘action now’ to cut Westminster taxes on N. Sea oil to save investment and jobs.
Malcolm Webb, Chief Executive, Oil & Gas UK, said: “Evidence of the threat from the falling oil price to UK investment and jobs is mounting daily with oil and gas companies cutting exploration and capital budgets and reviewing headcounts.
“The Treasury’s promise in last year’s Autumn Statement of a simplified tax allowance to encourage new investment must be delivered by Budget 2015 if it is to have any impact. However, with the continued falling and potentially sustained low oil price, this is no longer enough.
“We are encouraged to see a growing political and industry consensus around the now pressing need for more fundamental and urgent changes to the tax regime. With a significant amount of UK oil and gas production not even covering costs at a $50 oil price, the industry cannot carry the burden of a tax rate between 60-80%.
“The credible and reasonable response for the Chancellor in his upcoming Budget, assuming the oil price has not recovered by then, is the abolition of the 30% supplementary charge on corporation tax, which was introduced and then increased in direct response to rising oil prices, most recently in 2011.
“This would still leave oil and gas producers paying corporation tax at 30% – a tax rate 50%higher than the rest of British industry. “
Meanwhile, tomorrow’s meeting (14 Jan) in Aberdeen between UK Energy Secretary Ed Davey and the oil and gas industry will form a major part of the UK Government’s on-going work to support the sector even further, said Scottish Secretary Alistair Carmichael.
Chaired by the UK Government and attended by Oil and Gas UK, representatives from over a dozen major oil and gas companies as well as the Scottish Government, the twice-yearly PILOT programme facilitates the partnership between the UK oil and gas industry and government to help secure the sector’s long-term future
Carmichael added: “PILOT has been the vehicle for many of our great success stories in one of our most vital industries, from attracting global investment into Scotland through to preparing our future oil and gas workforce.
“Bringing together Government with the major oil and gas figures in this country is crucial now more than ever for encouraging future investment and ensuring a bright future for the sector right through the supply chain.
“The visit by the Energy Secretary to Aberdeen on Thursday will form an important part of our on-going work to build on what we have done in recent weeks to support the Oil and Gas sector. This includes the package of allowances and tax reliefs as part of the Autumn Statement and the on-going implementation of the Wood Review.
“The remit of PILOT is partnership working and I hope this is the frame of mind which the Scottish Government will approach this meeting – willing to listen to what the industry has to say rather than coming armed with a list of grievances. We are willing to listen to the Scottish Government but equally they have substantial powers at their disposal on areas such as enterprise, education and skills and infrastructure investment – all crucial for the future of the oil and gas sector and which I hope they will seek to use.”