Sector News

Opinion: North Sea is open for business

March 27, 2015
The fall in the oil price these last few months has been a big help for anyone who drives a car and pays an energy bill.
But I know that for the north-east that boon has come at a price.
Last year, Sir Ian Wood, Aberdeen’s most successful businessman, left us in no doubt about the dangers facing the oil and gas industry in the north-east.
It meant that, when I was preparing my Budget over the winter weeks, I knew full well that the country could not afford to sit idly by and watch one of our great British industries find itself in even deeper peril.
We were starting from a position of growing strength: thanks to the field allowances we’ve introduced, we saw a record £15billion of capital investment last year in the North Sea.
But we knew we had to do a lot more. We needed to send out an unambiguous signal that the North Sea was open for business – for good.
I hope and believe that last week’s announcements in the Budget will do just that: new simple and generous tax allowances to stimulate investment; funding for seismic surveys to study under-explored areas; a cut in petroleum revenue tax from 50% to 35%, and an immediate cut in the supplementary charge from 30% to 20%.
This kind of package does not come cheap to the Exchequer. It amounts to £1.3billion of support for the industry. But it does, I believe, mean that there is now every reason for an investor or an oil company to look at the UK Continental Shelf and see an opportunity that’s worth grabbing with both hands.
We expect our package of support to increase production by 15% by 2019-20, adding the equivalent of 0.1% of GDP to our country’s economy.
Of course, with a general election only a few weeks away, people now face a choice.
The SNP has completely failed to tell us how such a package of support would be affordable if, as it wishes, we were no longer one United Kingdom.
Instead, Alex Salmond and his colleagues make utterly unrealistic claims about the future.
Let me agree with the SNP on one point: North Sea oil has been a massive boon to the British economy over the last 40 years. It has seen us through some very difficult times. Nobody is in any doubt about that.
But it is one of the great strengths of our 300-year-old Union that, just as we pool our resources, so, too, we share our challenges and find solutions together.
So, when the industry in the north-east is in trouble, the UK has the strength and stability to be able to help.
In fact, it has a duty to do so, for we are one United Kingdom.
By George Osborne
Source: Energy Voice

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