The UK could gain an extra £787billion if we maximise production of our oil and gas reserves, an Aberdeen-based industry leader said yesterday.
Sir Ian Wood, chairman of Wood Group, said yesterday that the right tax incentives from the UK Government would allow the oil and gas industry to extract a further 25billion barrels in the years ahead.
This is more than twice the 12billion barrels that may be produced without additional government incentives to help extract marginal reserves.
Sir Ian told business leaders on the opening day of the Offshore Europe show in Aberdeen that, with the right fiscal regime, the government would benefit in more tax from the oil industry’s greater revenue.
He said: “If you say that extra 13billion barrels was at $100 per barrel, then that means an extra $1,300billion (£787billion) over the next 40 years to the UK.
“That is what the government really has to think about, and that is what we have to focus people’s minds on.”
Sir Ian was addressing a panel of speakers which included First Minister Alex Salmond.
Responding to Sir Ian’s comments at the Aberdeen and Grampian Chamber of Commerce breakfast, Mr Salmond agreed that the Exchequer should take into account the rewards that would come with greater tax relief for oil companies drilling for marginal reserves.
He said: “To be successful in an argument about tax incentives, you have got to look at what the potential revenues are going to be.
“You have to look not just at the size of the market, but what the effect on the Treasury is going to be.
“Any argument has to say an investment is going to result in this much revenue, and the Treasury will then take something from that.”
Earlier, the first minister spoke to the breakfast audience at Aberdeen Exhibition and Conference Centre about Scotland’s oil and gas generation and its future in renewable energy.
Mr Salmond said Aberdeen must transform itself from the oil capital of Europe into one of the energy capitals of the world.
“What we are talking about is the emergence of a marketplace in terms of offshore renewables comparable in scale to the huge marketplace we have seen over the last 40 years,” he said.
The UK energy minister, Lord Hunt, later told the Press and Journal the government was determined to extract as much oil and gas from the North Sea as possible.
He added that, although tax incentives were for the Treasury to introduce, he would make sure the Exchequer took the views of the oil sector into account.
Lord Hunt added that companies in the oil and gas industry were well placed to be at the forefront of the transition to renewable energy.
He said: “The people with skills and expertise in the North Sea oil and gas industry will have an important role in future renewable-energy developments.”
Mr Salmond said yesterday that a new Scottish energy advisory board that he is to chair will play a vital role in shaping the future of Scotland’s energy sector.