A Treasury official pledged last night that the UK Government wanted to create a tax regime to promote investment and innovation in the North Sea.
She also said the oil and gas producers would still have to make a fair contribution to public finances.
Economic Secretary Chloe Smith was speaking after leading the inaugural meeting of a new so-called fiscal forum between industry bosses and the government.
The event, held yesterday in London, saw Ms Smith, Energy Minister Charles Hendry and Department of Energy and Climate Change officials in talks with oil and gas sector bosses and industry body Oil and Gas UK.
OGUK welcomed the engagement, but stressed the need to focus on the medium to long-term future of the North Sea. While short-term investment had been at record levels, it said a medium to longer-term decline in production, exploration and tax revenue were at stake.
The meeting came just weeks before the next Budget, due in March, before or at which it is hoped new field allowances will be announced in an attempt to alleviate issues caused by the chancellor’s £10billion tax raid on the industry in the previous Budget. It is also hoped uncertainty over decommissioning tax relief, blamed for a drop in asset deals in the UK North Sea, could be resolved.
Chief executive Malcolm Webb said: “We are concerned that more than one billion barrels of the UK’s oil and gas resource will remain undeveloped under the current tax regime.
“Resolving uncertainty on decommissioning reliefs could deliver an additional two billion barrels.
“Setting all this against 2011’s dramatic falls in exploration drilling and in production and the resultant £2.3billion drop in expected tax revenues, measures to stimulate investment need to be introduced as a matter of urgency.”
Mr Hendry said: “We want to work closely with industry to realise the full potential of the North Sea and promote further investment and exploration activity.”
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