Nicola Sturgeon Calls on UK Government to Lower North Sea Taxes in March Budge

Nicola Sturgeon has called on the UK Government to lower taxes on the North Sea oil and gas industry in the March Budget.

The First Minister said Chancellor George Osborne should take “urgent action” to protect jobs in the North Sea as she convened a special session of the Scottish Cabinet in Edinburgh.

Sturgeon said Finance Secretary John Swinney are to seek an urgent meeting with the Chancellor to set out the Scottish Government’s view, and lobby him to ease the “tax burden”, “remove barriers to exploration” and back reskilling within the sector.

She also confirmed that the work of the energy jobs task force, established last January and due to complete its work this month, would be extended following the announcement that BP is to cut about 600 jobs in the North Sea amid plummeting oil prices.

Sturgeon said the Scottish Government would work with the industry to help remove barriers to exploration, support the training and re-skilling of staff, enable technology to improve production and address issues of access to finance.

She said: “There is no doubt the industry is currently facing an extremely challenging outlook, but oil and gas can continue to make a significant contribution to the Scottish economy and energy security for decades to come. However, this will only be achieved if we support the industry through this difficult period, encourage investment and ensure it remains well placed to benefit from a future upturn in oil prices.

“Cabinet have agreed to focus our efforts, along with those of the energy jobs task force, on the key areas of skills, exploration, innovation, and access to finance.”

Sturgeon insisted the Scottish Government was taking action to support the industry at this difficult time, but stressed it needed to be matched by a commitment from the UK

Government to address the fiscal regime in which the industry operates.

She added: “Only the Chancellor can deliver the competitive tax regime the sector requires at this moment and following our discussions, we will continue to make the case to the UK Government for urgent action in the forthcoming Budget to lower the tax burden on the industry, a move that will help to protect jobs and investment.”

The World Bank yesterday played down the likelihood of a further collapse in the crude price but said the glut of oil that sent prices crashing by almost half last year and another 27 per cent this month would continue to dominate the market for the next year.

Earlier this week, The National revealed details of major new research into the oilfield gas service sector by international law firm Pinsent Masons, which showed that 98 per cent of senior executives believe the oil and gas industry will recover to “peak” levels of profitability, with one-quarter of them expecting it to happen within three years.

The figures came as there was more good news about merger and acquisitions activity in the coming year, both in the North Sea and for UK firms looking abroad.

Meanwhile, Downing Street said Energy Secretary Amber Rudd delivered a presentation to the UK Cabinet on the North Sea oil industry. A Number 10 spokesman said the presentation was made “in the context of the falling oil price and the impact that is having on the oil industry”.

The spokesman added: “There was a discussion around that and around how we move forward to ensure that we continue to support that industry as much as we can.”

Scottish Energy Minister Fergus Ewing later told the Scottish Parliament that he was “not yet convinced” the UK Government had taken on board the need to stimulate exploration in the North Sea. “We have repeatedly called for more exploration because oil exploration has dropped to parlously low levels,” he said.

“In order to maintain the teams of expertise and people specifically in exploration there needs to be more work for them to do. It’s worth recognising that while tax is not the main focus of industry at the moment – quite frankly it is survival – tax is a necessary tool in the box that can contribute towards the objective of surviving to thrive thereafter."

Ewing said many North Sea operators were worried about a lack of clarity surrounding "decommissioning liabilities", adding: “In particular, very many operators that I have met in the last few weeks of fairly intensive engagement with the industry, and I won’t name them, have said the same thing: there must be clarity of decommissioning liabilities.

“The lack of clarity is impeding investment, it is blocking deals. Those deals could secure the future of the constituents (of Aberdeen).Therefore, I do urge the UK Government to include in their spring budget the necessary steps, upon which I know they are obtaining advice, in order to allow those deals, to allow that investment, which will considerably assist the industry in its toughest challenge.”

Source: www.thenational.scot

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