North Sea oil industry could be boosted by change in Budget

Chancellor Philip Hammond has been urged to unlock billions of pounds in investment in the offshore industry by changing tax rules in this week's budget.

More fields are being decommissioned. Picture SWNS

Trade body Oil and Gas UK said that the UK Goverment could unlock nearly £40bn worth of investments by making a tax change in Wednesday’s budget that they described as vital.

The Chancellor has previously hinted that he was looking at amending current rules to allow those producers selling fields to move credits to incoming owners.

As it stands, the history of tax contributions remains with the original owner of teh asset, but a change could allow buyers to reclaim some of the costs of decommissioning wells.

Oil and Gas reason this would eventually save taxpayers by extending the life of some of the North Sea’s more mature fields.

The Scottish Conservatives have talked up their potential bargaining power this week, and Mr Hammond has stated relief for the industry, which has yet to fully recover from an oil price crash in 2014, has been at the top of the Scottish Conservative group’s list of demands.

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Oil and Gas UK’s chief executive Deirdre Michie told City Am: “Transferable tax history would boost the number of mature field deals we are seeing in the North Sea.

“This, in turn, would help bring fresh investment into the basin, generate new production and provide extra tax revenues for Treasury.”