Call for UK to change oil tax regime
MSP Tavish Scott is pressing for changes to the oil and gas tax system as tumbling crude oil prices have led to job losses throughout the industry.
The call comes after oil prices fell to their lowest level since April 2009 and are 57 per cent below the price of summer 2014, figures which prompted a warning from oil research consultants Wood Mackenzie that billions of pounds of North Sea investment is in danger.
Mr Scott is due to meet BP and other oil and gas businesses next week in Aberdeen where he will emphasise that the forthcoming UK Budget needs to reflect the changing circumstances.
He said: “£3.8 billion was invested by the industry in five major North Sea and west of Shetland projects last year. Three of these are directly connected to Shetland – Laggan Tormore, Schiehallion and Clair, so the importance of Shetland to the industry is very clear.
“Industry experts are also warning that lower oil prices will have a direct impact on existing oil fields with high operating costs, something which will apply to many in the North Sea. BP along with many oil and gas companies are warning of job losses as investment is reduced so this is naturally a worrying time for people who work in the industry.”
Mr Scott added that lower oil prices were good news for motorists, businesses and people who buy oil for heating their home. On the UK mainland supermarket Asda has cut fuel prices to 104p per litre, (Leasks in Lerwick were charging 111p on Tuesday) and experts have claimed that oil at $40 a barrel would add 0.6 per cent to UK economic growth. Such an increase would mean higher tax returns which might offset the reducing tax income from the oil industry.
Mr Scott added: “The UK needs a tax regime that encourages or at least stabilises investment in oil and gas extraction and exploration. That would help protect jobs in the North Sea and west of Shetland and in the longer term would benefit Shetland too”.
Scottish secretary and MP for Orkney and Shetland, Alistair Carmichael, has called for the UK and Scottish
governments to work together to find ways of supporting the oil and gas industry.
Mr Carmichael had attended the Pilot meeting of ministers from both governments and key figures from major oil and gas companies in London on Tuesday.
He said after the meeting: “This was a good and constructive meeting where everyone round the table had their say and described with some clarity the challenges now facing the North Sea oil and gas sector.
“In particular I’m pleased the Scottish government now recognises the need for Scotland’s two governments to work together collaboratively. Frankly the industry is too important to Scotland, especially in the North East, for anything else.
“Today’s meeting shows the value of the industry and governments working together in good faith, with the best interests of the sector the sole focus of everything we do.
“Both the UK and Scottish governments have a range of powers they can use to help oil and gas companies, as well as those in the supply chain, and we should all be pulling together to help the industry weather the current storm.”
He emphasised that the government would be doing everything it could to help the sector and all of those employed by it “emerge strongly from this difficult time.”
Mr Carmichael and energy secretary Ed Davey, will tomorrow meet senior industry figures in Aberdeen to discuss ways of increasing support for the sector. Recent measures include the package of allowances and tax reliefs announced in the autumn statement and the on-going implementation of the Wood Review.