Hammond said keeping the current headline tax rates would help the oil and gas industry “continue its recovery from the 2014 oil price crash, protect jobs, and ensure the UK is attractive for new investment, whilst giving the nation a fair return for its natural resources”.
Industry body Oil & Gas UK recently revealed that 11 North Sea projects have been announced by companies this year, more than the last three years combined, with more expected in the coming months.
Chief executive Deirdre Michie said the Chancellor’s commitment to fiscal stability is “welcome recognition of the hard work by industry to encourage recovery following one of the most testing downturns in its history”.
She added: “With reduced costs, competitive fiscal terms and improved operational performance, the UK Continental Shelf is becoming an attractive investment proposition.”
Michie said these conditions are delivering a tentative recovery.
Hammond also said the UK government is to open a consultation on how to ensure Scotland is a hub for expertise in the huge global market for decommissioning oil rigs.
The Chancellor said a call for evidence will be launched to identify “what more should be done to further strengthen Scotland and the UK’s position as a global hub for decommissioning”.
The decommissioning market in the North Sea is forecast to grow steadily and is likely to be worth £1.8 billion per annum on average over the next decade.
“As decommissioning activity is predicted to grow, the UK supply chain has a major opportunity to develop world-class decommissioning capabilities,” said Michie.
“We look forward to informing this exercise with our expertise and ensuring that we can maximise opportunities in decommissioning while continuing our focus on maximising economic recovery.”
The UK government is also amending the tax rules on retained decommissioning costs to simplify the way older fields can be sold to new investors which it said will provide further support.