OIL and gas bosses have welcomed the announcement that a new independent regulator for the sector is to be based in Aberdeen.
Chief Secretary to the Treasury Danny Alexander told an industry conference in the city it would be the home for the organisation, to be called the Oil and Gas Authority.
The new body will work with the UK Government on a “wholesale review” of the tax regime for the sector, including “everything from tax rates to tax allowances,” Mr Alexander said.
It is being set up after a review of the sector, carried out by Sir Ian Wood for the UK Government, recommended a new regulator be established as the current one is ‘’no longer adequate’’ to meet the challenges of managing an ‘’increasingly complex’’ sector.
The Wood report claimed changes in the way the North Sea oil and gas sector operates could produce at least three to four billion additional barrels of oil over the next 20 years.
Mr Alexander told the Oil and Gas UK annual conference he was “very proud” to announce the new body would be set up in the city.
He said the Wood report had suggested “a new independent agency should be set up to maximise economic recovery by increasing collaboration across the industry and between government and industry”.
The UK Government minister added: “I can announce that the new agency will be called the Oil and Gas Authority.
“We have been thinking about where it should be based. It is my view that it should be headquartered at the heart of the UK’s oil and gas industry.
“So, I can tell you today that it will be based right here, in Aberdeen. This city and your industry deserve that commitment - and I am very proud to make it.”
The process of recruiting the chief executive for the Oil and Gas Authority will start next week, Mr Alexander said.
He hailed the North Sea as an “extraordinary economic asset” which generated almost £5 billion worth of corporation tax revenues last year alone.
But he added that was “considerably lower than in the past”, as tax revenues from the industry have been “declining for several years” with forecasters expecting this to continue.
Mr Alexander said: “Just because the North Sea is becoming less of a tax asset, it doesn’t mean it can’t remain a top economic asset.”
He said the UK Government’s goal was to “maximise the benefits that the North Sea can bring to our economy”, adding: “That means getting out every last drop of oil and gas that we can.”
He told oil and gas chiefs at the conference that measures such as the new agency and the review of taxation showed “the strength of the UK Government’s commitment to the future of your industry”.
Mr Alexander said North Sea oil and gas was the “jewel in the crown of British industry” and stated: “There is a UK dividend from staying together. As a United Kingdom we can ensure a brighter future for you and your sector.”
He added: “Let’s stay as one United Kingdom. Where the oil and gas industry can face the future with confidence and optimism.”
Oil and Gas UK chief executive Malcolm Webb welcomed the announcement that the Oil and Gas Authority would be based in Aberdeen.
He said: “The new regulator is now much more than just a vision or a theoretical construct.
“It is beginning to take shape, with a name, a location and - as we heard at the conference yesterday - the search for the new chief executive is under way.
“This is all very good news for our industry and we look forward to the creation of the new regulator over the coming weeks and months.”
Robin Davies, the oil and gas champion on ACSEF (Aberdeen City and Shire Economic Future), said: “We welcome the news that the new and independent Oil and Gas Authority will be located in Aberdeen, the heart of the UK’s oil and gas industry.
“This move reinforces the north-east of Scotland’s status as a global energy hub and will support ACSEF’s priority of anchoring the supply chain in this region.
“The oil and gas industry supports tens of thousands of jobs across Scotland and in the north-east and, with high levels of investment continuing, the new agency will be close to the industry and encourage continued innovation.”