Chief secretary to the Treasury Danny Alexander has said the government is set to introduce more tax breaks for the oil industry to stimulate North Sea investment.
Speaking at the Oil & Gas UK conference in Aberdeen on Thursday, Mr Alexander said the Treasury was aiming to introduce a “lighter tax regime”, particularly after executives at Premier Oil acknowledged the government’s small field allowance as easing the way for its 100 million barrel Catcher development.
The Treasury will launch its official consultation on the industry’s fiscal regime next month.
Mr Alexander said: “The next generation of investment is going to be in places that are more inaccessible and more complex where the cost are higher. So naturally enough, the tax we get back is going to be lower or that investment isn’t going to happen.
“That is the direction we are heading in now.
“We are making sure we have a tax regime that supports the principle objective which is to maximise investment in the North Sea.
“My own view is over time – over the next many years, there will be a lighter tax regime because the priority has to be to maximise investment, economic value, jobs and employment – so naturally that will mean a little less tax in future.”
Mr Alexander confirmed that the new regulator as proposed by Sir Ian Wood would be called the Oil and Gas Authority and would be based in Aberdeen.
He added that it would “be for an independent Scotland to take a view how it wanted to handle things” with regards to the regulator in the case of a yes vote in the independence referendum in September.
Headhunters Odgers Berndtson have been appointed to lead the search for the agency’s chief executive. The effort will be formally launched on Thursday when the first advertisements for the role will be published.
Mr Alexander added: “We are going to start recruitment next week for the chief executive of the new organisation, there will be job ads out there and we hope we will get some really good applicants from within the industry. I’d like to see some people with real experience of the industry come in to help set up and run the new regulator.”
Robin Davies, a director of Subsea7 and board member of the Aberdeen City and Shire Economic Future (ACSEF), welcomed Mr Alexander’s commitment that the new regulator would be based in Aberdeen:
“This move reinforces the north-east of Scotland’s status as a global energy hub and will support ACSEF’s priority of anchoring the supply chain in this region.
“The oil and gas industry supports tens of thousands of jobs across Scotland and in the north-east and, with high levels of investment continuing, the new agency will be close to the industry and encourage continued innovation.”
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