ONE of Scotland’s top energy lawyers has played down fears of a meltdown in the North Sea industry, but has called for the Chancellor to cut taxes for oil and gas operators “without delay”.
Bob Ruddiman, who heads the energy and natural resources group at legal heavyweight Pinsent Masons, said certain steps should be taken to ensure the UK Continental Shelf remained “sustainable and competitive” in the face of a low oil price in the medium term.
“Contrary to the hysterical claims by some pundits, the North Sea oil and gas industry is not going to end tomorrow,” said Ruddiman, “but the new landscape in which we operate has brought into sharp focus the question of why the tax burden remains so high.
“Contrast this with other industries which have had ongoing support, for example the initiatives to reintroduce car manufacturing in to some UK regions, and it’s little wonder E&P [exploration and production] companies feel aggrieved.
“Successive governments have failed to understand the requirement for a mature, long-term energy policy, instead taking a short-term view involving regular tinkering with tax rates.
“If Chancellor George Osborne wanted to show the energy industry some genuine New Year resolution he would consider further tax cuts without delay.”
The hard-hitting comments came just a day after a warning that a third of the UK’s listed oil and gas companies could run out of cash within a year.
Corporate health monitor Company Watch said that sustained low oil prices are likely to present “significant problems” for the 126 listed firms operating in the sector, a third of which are not generating any revenues.
Some experts have warned that the industry faces heavy job losses over the next year or so.
But Rudimman noted: “You don’t need a crystal ball to predict the UK will continue to be a significant producer of oil and gas for the foreseeable future, provided all stakeholders work together towards that common goal.”
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