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Treasury pledge to remove barriers and uncertainty to oil and gas industr

Treasury pledge to remove barriers and uncertainty to oil and gas industr
UK treasury secretary Justine Greening last night pledged to "improve engagement" with the oil and gas industry by launching a group to discuss future fiscal issues.

UK treasury secretary Justine Greening last night pledged to “improve engagement” with the oil and gas industry by launching a group to discuss future fiscal issues.

Speaking after a meeting with industry leaders at Aberdeen’s Offshore Europe exhibition, she confirmed plans to create a “fiscal forum”.

It will sit three times a year, be chaired by Ms Greening, economic secretary to the treasury, and will involved energy minister Charles Hendry and the Department for Energy and Climate Change, she said.

“We are going to be making sure we are engaging in a structured way, making sure we secure investment,” Ms Greening, who is visiting Shell’s Nelson platform east of Aberdeen tomorrow.

“We are now making sure we are working with the industry to have a tax system that supports the industry.

“It is also critical we work with DECC and BIS (Department for Business Innovation and Skills) on the regulatory side of this. If we

She acknowledged it was a mature basin but said there was plenty of opportunity for extending its life.

The forum has been set up in the wake of industry upset over the UK Government’s surprise North Tax on oil and gas producers.

Malcolm Webb, chief executive of industry body Oil & Gas UK, said discussions included what was needed to give field relief on stranded assets.

He said he hoped issues around decommissioning, which Ms Greening had been in talks with the industry over before the government proposed a cap on tax reliefs on work to decommission platforms, would be resolved by the 2012 budget.

He added: “There’s some regret, but what the industry is determined to do is to turn the page to overcome the problems that the government’s presented us with, and we really were encouraged today.”

Mr Webb said although the North Sea was vibrant, with multi-billion pound projects from the likes of BP and Statoil ongoing, they knew of £1billion of work that had been cancelled, from high pressure high temperature projects to brownfield work developments.

“It is also important to resolve the decommissioning uncertainty,” he said. “It is a serious over hang on people doing asset deals, which have slowed to a trickle, and also encumbering the balance sheets of, typically, new companies wanting to take on these mature developments.

“We think resolving it has the potential to unleash quite a lot of activity. The government needs to give a bankable assurance it is going to meet its side of the bargain (a proportion of the cost it has pledged to cover).”

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