A Conservative government would fix the tax regime for the UK oil and gas industry for the lifetime of the remaining reserves in the North Sea.
Shadow chancellor George Osborne said he wanted to introduce the move – a longtime goal of the industry – in “one of the earliest Conservative budgets” to bring stability to the sector and allow oil and gas companies to make long-term plans.
Mr Osborne made the pledge yesterday on a visit to Aberdeen, where he met representatives of Oil & Gas UK before heading to Perth for the Scottish Conservative Party conference. He said the current policy of setting oil and gas taxes on an ad hoc basis was overly complicated for firms and hampered long-term decision-making.
As well as fixing the tax regime, Mr Osborne said a Conservative government would do all in its power to ensure Aberdeen and the north-east was recognised around the world as a centre of excellence for oil and gas expertise, so that when reserves did start to run out locally the industry could survive as a global player.
He acknowledged that concerns about taxation and a falling oil price had led to a slowdown in drilling activity and capital investment.
But he warned: “Turn off the tap on those oil fields now and two or three years down the line the outlook for Aberdeen and the north-east will be very different.
“This is a really important moment for the North Sea,” he added. “Get the direction right in the next couple of years and the north-east will have a very long future with 25billion barrels of oil to be pulled out of the North Sea and many tens of thousands of jobs supported and created for decades to come.
“Get the direction wrong and people will pull out, up sticks and go off to other parts of the world where it is easier to do business and the tax regime is more attractive.”
His comments were welcomed by oil and gas leaders at yesterday’s talks. The delegation included Oil & Gas UK chairman Bob Keiller of PSN, Mike Bowyer of Halliburton, Tom Smith, of Nessco, Bernard Looney of BP, Jim House of Apache, and Nick Walker of Talisman.
Mr Keiller said members would welcome a fixed tax regime on the proviso that it was appropriate. Oil & Gas UK chief executive Malcolm Webb said: “If the competitiveness of UK projects is to be revived in order to attract the necessary investment, our province needs a stable and predictable fiscal regime appropriate for this mature oil and gas province.”
Oil & Gas UK also met helicopter operators yesterday to discuss the reinstatement of personal locator beacons as quickly as technically feasible. Use of the devices was suspended after the ditching of a helicopter in February, amid fears they could interfere with aircraft beacons and disrupt onboard communication systems.
Solutions were discussed by Oil & Gas UK and the Civil Aviation Authority and were passed on to helicopter operators yesterday. Oil & Gas UK’s Robert Paterson said: “I am confident we are now en route to finding a solution to these two technical issues.”