The principles of stability and certainty this Scottish Government is committed to will guarantee new investment in energy: we have no plans to increase the overall tax burden on the oil industry and no changes will be made to the fiscal regime – without consultation.
In the 30 years from 2011, 98.8% of UK offshore oil production will come from Scotland’s geographical share of the UK continental shelf – Prof. Alex Kemp, oil and gas, expert, Aberdeen University.
Scotland now has a second opportunity to steward our oil and gas assets for the benefit of the nation. Successive Westminster Governments have failed to provide effective stewardship of Scotland’s oil and gas resources.
Operators place a premium on operating under a stable and predictable tax regime so that the post-tax returns from investments can be appropriately evaluated. In recent years, the UK North Sea fiscal regime has not provided this certainty, and investment in the oil and gas sector has suffered.
Over the past decade there have been 16 substantive changes to the fiscal regime. These frequent changes, often without prior consultation, have earned the UK a reputation for fiscal instability, inhibiting new investment, decreasing the life-span of some fields and damaging the Scottish economy.
Sir Ian Wood commented on the issue of fiscal instability within the interim report to his UKCS Maximising Recovery Review, saying that “clear views were expressed that fiscal instability has been a significant factor in basin under-performance”.
We welcome this report, which also makes clear that the current structure of having the regulatory body situated within the Department for Energy and Climate Change, is “no longer adequate to meet the challenges of managing an increasingly complex basin”. The evidence gathered by Sir Ian showed unanimously that the existing regulator is “significantly under-resourced and under-powered”.