North Sea oil expert Sir Ian Wood, who led a review of the industry for the Government which reported last year, said a major tax cut was necessary to give producers the confidence to keep their operations going.
He said the supplementary charge on profits should be cut from 30% to 20% although he acknowledged that would have little impact in the short-term because prices were so low.
Sir Ian told BBC Radio 4’s Today programme: “The key is to stabilise the industry, avoid a real crisis of confidence and ensure they can see a sustainable future.
“There’s virtually nothing, fiscally, that can be done at $45, $50 oil to have any impact because, at that stage, very few operators are making profits and if they are not, they are not paying taxes.
“What is really important is to look now and set a tax regime and make it absolutely clear it’s a medium-term tax regime so it will continue as the oil price recovers.”
That would involve “at least a further 10%” off the supplementary charge, he said, adding: “On that basis hopefully operators will have the motivation to be prepared to see their way through what’s going to be a very difficult period.”
Read Press and Journal Energy Editor Jeremy Cresswell’s latest views here
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