Government considers tax cuts for North Sea oil and gas firms

Published on Friday 16 October 2009 17:47

THE Government will look at new tax cuts for the oil and gas industry as "circumstances change" in the North Sea, Chancellor Alistair Darling said today.

He visited Shell's Shearwater platform, 125 miles east of Aberdeen, this morning before meeting industry bosses in the city.

Mr Darling said the new "field allowance" announced in this year's Budget is aimed at encouraging further development in the North Sea.

"You are dealing with a situation in the North Sea that is constantly evolving and as circumstances change we need to look and ask ourselves 'Is the tax regime right?'," he said after the visit.

"Part of my purpose of visiting Aberdeen today is so that I can speak to people in the industry, see what's happened over the last 12 months or so, to help inform any decisions I might make in the Pre-Budget Report or in the Budget next year."

Asked if this meant further concessions for the oil industry, Mr Darling said any proposal would be outlined in the Pre-Budget Report.

He added: "Over the last few years I have made changes to the North Sea oil taxes to reflect the fact that conditions change.

"I will continue to work with the industry. I think it's important that the Government and industry work closely together."

North Sea oil and gas reserves are maturing; however, 25 billion barrels of oil and gas are still to be extracted, the Chancellor said.

John Gallagher, vice chairman of Oil & Gas UK and technical vice-president of Shell Upstream Europe, said afterwards that the new field allowance is a "step in the right direction".

But he added: "As highlighted in the Energy and Climate Change Committee's report on UK offshore oil and gas, more has to be done to foster this great British industry and maximise recovery of oil and gas in the North Sea for the benefit of the country."