Investment in North Sea to 'smash records', says Fallon

The North Sea oil and gas industry is in line for another record year of investment, according to the UK Government.

Energy Minister Michael Fallon said yesterday that the offshore sector was on course to smash last year’s total thanks to multibillion-pound projects which will extend the life of the industry for decades to come.

Speaking during a visit to Aberdeen, Mr Fallon said government tax breaks had helped revitalise a sector many saw as declining and safeguard more than 400,000 jobs.

The minister was on his third visit to the Granite City since his appointment in March, to receive offshore survival training.

He is due to fly out to Total’s Elgin platform today.

Speaking to the Press and Journal last night, Mr Fallon said more than £14billion would be invested in UK oil and gas developments this year, compared with the £11.8billion recorded in 2012.

“This will be a record year for the North Sea, and it shows the confidence that industry has in the region’s future,” he said.

“The decline of the North Sea has been exaggerated – it is maturing, but we are only now in the second half of this industry’s life.”

Oil and gas giants BP, Statoil and Chevron have all signed huge deals with contractors this year for developments planned in the North Sea and west of Shetland.

The UK Government introduced a large levy rise on the industry in 2011 but, after being warned that it was putting companies’ spending plans in jeopardy, the coalition at Westminster introduced a string of tax breaks.

Mr Fallon said: “I do not see how an independent Scotland could help finance this scale of investment, how it could fund it and how the industry could be certain of it continuing.

“It is very hard to see an independent Scottish government providing or being able to afford incentives and tax breaks on the scale the UK has been able to offer, which have driven this record level of investment.”

A spokesman for Scottish Energy Minister Fergus Ewing said last night: “Mr Fallon has clearly forgotten the recent history of the Tory-Lib Dem UK Government’s attitude to the oil and gas industry – but the people of Scotland and the industry itself have not.

“As industry body Oil and Gas UK pointed out in their 2013 Activity Survey, it is successive Westminster governments which damaged investors’ confidence due to ‘numerous adverse tax changes’.

“The most recent example of this fiscal instability was the 2011 UK budget where changes to the North Sea fiscal regime were announced with no prior consultation with the industry.

“With independence, the Scottish Government will ensure there is long-term stability and certainty in the fiscal and regulatory regimes, including a commitment to formal consultation prior to future reforms.

“As the UK Government have themselves admitted, there are around 24billion barrels of reserves remaining. With independence, Scotland can ensure that not only does the fiscal regime ensure predictability for the industry, but that revenues benefit the people of Scotland instead of being squandered by Tory Westminster Governments.”