Sector News

Hopes raised over UK Gov North Sea exploration incentives

October 13, 2016
News

Hopes have been raised that the UK Government is looking at bringing forward incentives to encourage North Sea exploration.

Junior energy minister Jesse Norman refused to comment on the contents of the Autumn Statement yesterday when asked by the SNP’s Callum McCaig if measures to support the industry would be included.

But the Tory frontbencher described exploration as “very important”, highlighting the “depleting” UK Continental Shelf.

And he added: “It is an issue of some focus for the government.”

The exchange came after Chancellor Philip Hammond’s right-hand man indicated the sector should not expect any additional support to be announced next month.

Speaking to the Press and Journal at the Conservative party conference, Treasury Chief Secretary David Gauke refused to make new pledges given the “very recent” measures introduced by Mr Hammond’s predecessor George Osborne.

These included scrapping the petroleum revenue tax (PRT) and reducing the supplementary charge to 10% – backdated to the start of the year.

His intervention provoked a storm of criticism, but Baroness Neville-Rolfe – the senior energy minister – has since insisted her government’s commitment to the future of the oil and gas sector is not in doubt.

In an exclusive personal message to P&J readers last week, she pledged to work to put the industry in the “strongest possible position”.

During yesterday’s Scottish Questions in the Commons, Aberdeen South MP Mr McCaig, who is his party’s energy spokesman, said the industry had been “crystal clear” that more work needs to be done to boost exploration.

He asked: “Will the government bring forward exploration incentives in the Autumn Statement to protect employment and boost production?”

Mr Norman replied: “Exploration remains very important. The continental shelf is depleting.

“As you will know, the government has taken some serious steps in Aberdeen with the city deal.

“I will not comment on the autumn statement, but it is an issue of some focus for the government.”

His remarks prompted immediate speculation that support could be forthcoming on November 23.

Former Scottish secretary Alistair Carmichael said: “Having raised expectations in this way we shall be watching closely to see what comes from the chancellor.”

He added: “The oil and gas industry remains in a critical situation but still has the potential to make a massive contribution to the UK economy – especially if the pound remains weak.

“The government must not be allowed to think that they have no more to do to help the industry.”

Mr McCaig said “at least one part of the government” appeared to be considering the issue.

He insisted: “We need proper engagement and we need some action to support the industry and protect people from further job losses.”

Oil and Gas UK Chief Executive Deirdre Michie said the North Sea basin was in “desperate need of fresh investment”.

She added: “We will continue our focus on efficiency and driving down the cost base, but in addition the government and the Treasury must build on their support for our industry.”

The body is also calling for measures that allow tax history to be transferred upon an asset sale to facilitate the trading of assets and encourage new entrants to the market.

By Lindsay Razaq

Source: Energy Voice

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