Tax break hint for offshore exploration after industry fears

Chancellor George Osborne visits the Montrose platform last year
Chancellor George Osborne visits the Montrose platform

The prime minister has dropped a major hint that the looming Budget could include new tax breaks to boost North Sea exploration work and safeguard thousands of jobs.

David Cameron said yesterday that his chancellor, George Osborne, had been listening carefully to calls for extra measures to maximise oil and gas recovery.

The Conservative leader spoke out just days after the Press and Journal revealed the offshore sector was facing an exploration crisis.

Industry doyen Sir Ian Wood was appointed by the UK Government to prepare a blueprint for the future of the oil and gas industry – and has already warned there must be a significant “step-up” in exploration over the next decade.

Mr Cameron said in the Commons yesterday: “It’s very important that we make the most out of that asset that is the North Sea.

“I know my right honourable friend the chancellor will listen very carefully to what he (Sir Ian) says about making sure that the tax system for the long term encourages the maximum recovery.”

Mr Osborne stunned offshore producers in 2011 with his now-infamous £10billion tax raid.

There was an angry backlash from the industry, and since then he has tried to restore confidence with new field allowances and contracts guaranteeing tax breaks for decommissioning North Sea assets.

The Treasury remained coy about any new measures to boost exploration last night, insisting: “We don’t give detailed commentaries on what we are or aren’t looking at around the Budget.”

But Malcolm Webb, head of Oil and Gas UK, said: “We are greatly encouraged by Mr Cameron’s reaffirmation of his commitment to the industry, the forthcoming Wood Report, and ensuring the tax system encourages maximum economic recovery of the UK continental shelf in the long term.”