Future prosperity of the North Sea

16 Sep 2015 11:55 AM

Energy Minister calls for UK Government action to support oil and gas sector.

In a statement to parliament yesterday (Tuesday), Energy Minister Fergus Ewing has 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 figures from Oil & Gas UK indicate 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.

In the statement, Mr Ewing will outline the Scottish Government’s calls for continued support for the oil and gas sector, including:

• 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.

Minister for Business, Energy and Tourism, Fergus Ewing said yesterday:

“There is a shared determination within the industry to collaborate and overcome the challenges currently besetting the industry, which have been exacerbated by the low global oil price.

“Oil & Gas UK figures showing production starting to increase and operating costs starting to fall but much more is needs to be done by both industry and 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 ten 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.

“In addition and in order for fiscal reforms to be effective and to provide confidence to investors a commitment should be made that there will be no tax increases for the life of the current UK Parliament. I believe that future decisions on fiscal policy should be underpinned by the principle of Maximising Economic Recovery.”

Mr Ewing added:

“The Scottish Government has taken action to mitigate job losses in the sector, with the First Minister setting up the Energy Jobs Taskforce in January.

“Our Energy Jobs Taskforce has made a significant difference to the sector. The Taskforce has engaged directly with over 1,700 individuals and over 100 employers to help those affected move into new employment, new ventures, training or education. Much of this support, including one-to-one redundancy support for 1300 people, has been delivered through the Partnership Action for Continued Employment (PACE) programme.”