North Sea oil industry will recover

Sir Ian Wood insisted the industry will eventually recover – but warned thousands of jobs could be lost in the next year as the price of crude continues to stagnate at around $60 a barrel.

His intervention follows concerns by the explorers’ association this week that the industry was “close to collapse”.

Sir Ian said: “These comments are over the top for an industry which thinks and plans long-term. It’s important to have a balanced perspective at this time. The UKCS [UK Continental Shelf] does face a very difficult year to 18 months which will see a slowdown in investment, the loss of some offshore production, up to 10 per cent, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate.

“It will be a tough time for the industry and the people that work in it, but we are entering a downturn from which we will recover.”

The price of oil is likely to bounce back in 2015 or early 2016, he added.

Chief Secretary to the Treasury Danny Alexander said the government must accept lower taxes from the North Sea in future to create jobs and boost investment.

The Highland MP added: “This is an industry used to dealing with very volatile prices, but clearly this is very concerning.”

He said the government must keep improving regulation of the North Sea, drive down taxes and continue with support measures such as decommissioning, investment and exploration allowances.

The industry also has a responsibility to reduce costs and maximise efficiency, he added.

“Obviously, we have started to reduce the headline rate of tax, and that is now in a downward path over the next few years,” he said.

“We have to accept that there is going to be significantly less tax from North Sea oil and gas because that is necessary to get the investment, to continue to create the jobs and support what is one of the most important employers, not just in Scotland, but across the whole of the UK.”

First Minister Nicola Sturgeon yesterday stepped up pressure on the UK government to provide more help.

She said: “I think we need more from the UK government around tax incentives, we need more detail about the implementation of the proposed new investment allowance, we need to be supporting exploration.

“We need serious and very definite measures from the UK government to help.”

Scottish Labour leader Jim Murphy has written to the First Minister, after meeting her last week, calling on her to set out a tax cut needed to save oil jobs.

“I am keen to understand specifically the scale of what you are calling for,” he said. “We need to understand how much extra support would be needed if the oil price continued to fall.”

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North Sea oil industry will recover - Ian Wood