A think-tank is calling for government policy and decision-makers responsible for oil and gas taxation and regulation to be moved from London to Aberdeen.
Moving it closer to the industry itself would echo the situation in Norway and the call is being made whatever the result of the Scottish independence referendum in September, according to apolitical business organisation N-56
The group is also calling for the creation of a hydrocarbon investment bank to boost investment in the sector, as well as a long-term oil and gas industrial development plan to foster economic growth.
“The oil and gas sector is one of Scotland’s great strengths and it has the potential to remain so for many years to come,” said Martyn Tulloch, of Tulloch Energy, which prepared the report alongside economics consultancies, Damvad (Norway, Sweden and Denmark) and Biggar Economics (Scotland).
“Indeed, the UK Continental Shelf (UKCS) has already been in production longer than was predicted in the 1970s and 1980s with more than £1trillion pounds of hydrocarbons having been produced from the UKCS since 1970.
“At least as much value remains to be produced as already has been and this represents a tremendous opportunity.
“Implementing the recommendations of the Wood Review promptly and in full is essential to ensure that the remaining potential of Scotland’s offshore oil and gas reserves is maximised.
“The recommendations in this report are proposed as additional actions to help secure the greatest benefit for the wider Scottish supply chain.
“There is an urgent need for all-encompassing industrial development plan, far exceeding the scope, scale and ambition of the myriad of existing strategies, business plans and similar initiatives.
“Scotland enjoys a leading position due to its long established industrial base, strong academic institutions and established support systems. We need to support the industry in a more significant manner than it is, but the opportunity remains to establish a world-leading industrial support mechanism, led by the industry with wider stakeholder support.”
The report calls for:
Exploration incentives – A range of measures to boost exploration, including taxation incentives, sharing exploration experiences and reducing drilling costs.
Fiscal stability – A review of the taxation system and wider fiscal framework should be undertaken in conjunction with industry to ensure that the regime is competitive and fit for purpose. Australia, Canada, US, Malaysia and Singapore are widely praised for their stable taxation regimes, the UK is not.
Stimulating research and development – As part of a comprehensive review of the taxation system, consideration should be given to better incentivising at corporation level the development and deployment of technologies to enhance recovery, extend asset life and increase production in a mature basin.
New financing solutions – The establishment of a Hydrocarbon Investment Bank (along similar principles to the Green Investment Bank) should be investigated. It would be tasked with both a domestic and an international remit and would be able to support exploration companies, operators and the wider supply chain.
Attraction of HQs – Operators and service companies should be incentivised to relocate their corporate headquarters to Scotland through for example, depending on future constitutional arrangements, lower levels of corporation tax.