I don’t think the industry was expecting any major changes to the fiscal regime for the North Sea today, given the overhaul we have seen over the last two Budgets.
We will hear predictable howls of protest from the SNP, but I think it’s important to consider the impact that recent UK Government policy has had on the sector.
Industry body Oil and Gas UK has said that the UK Continental Shelf (UKCS) is now the most fiscally competitive in the world, thanks to changes brought in by the Conservative government at Westminster.
In March’s Budget, George Osborne effectively abolished Petroleum Revenue Tax and halved the Supplementary Charge in a complete step change in the taxation regime.
The total package of measures was estimated to be worth £1.3billion to the industry over ten years.
In addition, just this week, the UK Government-led City Region Deal for Aberdeen and Aberdeenshire was formally signed.
This joint investment of £250million could create more than 3,000 jobs over ten years and generate £826million for the North East once private sector and other investment is factored in.
Central to the plans are the creation of an Oil and Gas Technology Centre, which is already up and running with £4million in initial funding in place.
Sir Ian Wood said the OGTC will help to transition Aberdeen from a centre of operations in offshore oil and gas to a “globally-recognised leader” in mature basin technology and would help to anchor supply chain companies here for the long-term.
We have also seen the fruits of the initial work by the Aberdeen-based Oil and Gas Authority (OGA), set up by the UK Government in line with recommendations in the Wood Review for Maximising Economic Recovery from the UKCS.
EnQuest announced on Monday that it has achieved first oil on the North Sea Scolty/Crathes development – under budget and ahead of schedule.
This milestone has been regarded as evidence that the OGA’s Maximising Economic Recovery (MER) strategy in working and making speedy progress in cutting costs and utilising new technologies to develop hard to reach pools.
Given some of the comments today, it is important to recognise that all of this support for the North Sea oil and gas industry has come from a Conservative government.
If we had voted Yes in 2014, we would have been independent from the rest of the UK in March 2016.
Given that tax receipts from the industry are forecast to be negative for the next five years, I dread to think of the impact on Scotland’s finances.
The reality is that an independent Scotland would be facing up to significant tax rises or massive cuts to public spending to bridge the gap.
Thanks to the broad shoulders of the UK, not only are we protected from having to make those decisions, but we have a government that can go further than any other to help the industry.
We would do well to remember that today.
Alexander Burnett is the Scottish Conservatives Energy Spokesman