The Courier & Advertiser (Perth and Perthshire Edition)
Oil and gas sector seeks pledge from Government
Call for more support after investment falls in UK Continental Shelf
Oil & Gas UK wants Chancellor Philip Hammond to use his Autumn Statement to help boost investor confidence in North Sea exploration and production.
The North Sea oil and gas industry faces fierce global competition to attract investment, with the challenges of a low oil price, a maturing industry and uncertainty for the sector.
Investment in the UK Continental Shelf has fallen to around £9 billion this year from a record £14.8bn in 2014, illustrating the difficulty for investors in accessing finance for asset development.
Deirdre Michie, Oil & Gas UK’s chief executive, said: “Sentiment and stability are important, and the Chancellor has a real opportunity to use the Autumn Statement to send a clear message to investors that the UK Continental Shelf is a great place to do business.”
Exploration and development drilling has fallen to record lows, and a drought of new investment suggests 2016 and 2017 will be no better.
“I have asked Mr Hammond to get behind the UK’s oil and gas industry by providing certainty in our fiscal regime and recommitting to the Treasury’s ‘Driving Investment’ strategy for the sector,” said Ms Michie.
There should also be recognition of the supply chain as a key strength in the economy, she stated, with world-leading capability.
“The UK oil and gas industry is much more globally competitive than it was two years ago,” she continued.
“The cost of doing business in the North Sea has come down significantly and production has increased for the first time in 15 years thanks to the industry’s efforts to make its operations more efficient.
“We urgently need to see new entrants into the market and increased asset trading is one area that could boost activity in the North Sea by facilitating the trading of late-life assets.”
Ms Michie said the importance of government sending a strong signal of confidence and support cannot be overestimated.
As well as committing to the Driving Investment fiscal plan, Oil & Gas UK wants the UK Government to promote the competitiveness and capability of the UK’s oil and gas supply chain as part of the country’s new industrial strategy.
Completing work on decommissioning tax relief through transferring tax relief upon asset sales and extending the investment allowance for operating expenditure to increase production from an asset or keep it producing for longer are also on Oil & Gas UK’s wish-list.