Webb accuses ministers of inconsistency
Oil leader calls for radical tax changes to stop further damage
Malcolm Webb, chief executive of Oil & Gas UK will spell out the damage done by inconsistent government policy when key figures gather for an Oil and Gas Summit in Aberdeen which has been called to protect jobs from the falling price of a barrel.
First Minister Nicola Sturgeon and Scottish Secretary Alistair Carmichael will join representatives from industry, local authorities, trades unions and development agencies aiming to put together a plan for tackling the crisis which has seen thousands of jobs cut following the 60% fall in the price of Brent crude since last summer.
Webb will say: “An unpredictable and harmful business environment has put the UK’s valuable oil and gas industry at great risk and realism about the continuing prominence of oil and gas in the UK’s energy supply should be a guiding principle in future policy decisions.”
He will argue that government policy combined with sharply rising costs and a sudden drop in oil price, has dealt a blow which is doing “real and potentially long-lasting damage”.
Webb will tell those attending: “We in the UK must all wake up to the fact that our reliance on oil and gas for our transport, heating and electricity needs, which currently sits at 73 per cent of total energy, is not going to wane for several decades yet.
“In stark contrast to the many benefits of producing our own indigenous oil and gas, importing energy does not support high skilled British jobs or the public purse and damages the country’s balance of trade and exports of goods and services.
“If we are to avoid lasting damage to this industry and its £35 billion supply chain, now is the time for meaningful action. The industry is having to take tough decisions and implement necessary cost reduction and efficiency improvement measures.
“Alongside this, the Department of Energy must proceed as quickly as possible with the full establishment of the new Oil and Gas Authority, and HM Treasury must radically reduce the tax burden on this mature oil and gas province.”
The First Minister will share Mr Webb’s call for changes to the tax regime. In a statement, she said: “The North Sea has made an enormous contribution to both the Scottish and UK economies over the last 40 years and I am certain this will continue for many years to come. However, it is vital that for the industry to succeed in the decades ahead we need fiscal and regulatory change in the oil and gas sector.
“In the short term, that means urgent action on taxation to give the industry the certainty and security it needs to protect jobs and investment. It is essential that the tax reductions are sufficient to instil investor confidence, as without that maximised recovery will not be achieved. This is because the extra investment needed for smaller fields, ageing infrastructure as well as much more exploration and appraisal is only going to be made by operators with substantial tax reductions.
“This summit is an important opportunity for joined up action from industry leaders, unions and government to ensure the industry has the brightest possible future.
“Investors need a strong signal that the North Sea is open for business and they need that signal now.”