The chancellor says the Treasury is “pulling out the stops” on oil and gas tax reform demands – but cannot promise changes will be ready in time for his Budget.
Encouraging small firms to exploit remaining North Sea reserves by allowing them to inherit decommissioning reliefs when they buy assets is top of the industry’s wish list.
But Philip Hammond – in Aberdeen to announce a £5million offshore investment – said there were “complex” issues that may not be resolved by the time of his November 22 Budget.
Speaking at the Oil and Gas Technology Centre, he said the UK Government was “very strongly supportive” of efforts “to extract every possible last commercially-viable molecule from the basin”.
He said the funding would allow refinement of seabed exploration data that “will add significant value to the bidding round”.
“The government will go on being flexible, innovative and supportive to the industry as it develops its plans,” he said.
But he struck a cautious tone over when changes to decommissioning reliefs might come.
“We are analysing the proposals for risk. We have got to make sure any proposed changes do not create avoidance opportunities,” he said.
“We are pulling the stops out to move as quickly as we can.
“If we are ready to do so then I will be able to say something at the Budget. I can’t promise that that will be the timeframe.”
Oil & Gas UK chief executive Deirdre Michie said the funding was a “welcome boost”.
She added: “We need HM Treasury to maintain its commitment to the Driving Investment plan and also enable transferable tax history in the autumn Budget, which we believe will further unlock the transfer market for late-life assets, encourage more investment, and delay decommissioning for as long as possible.
SNP energy spokesman Drew Hendry said: “We have heard these budget pledges of action on tax before, yet there is still no action and, now, it seems, even the promise looks shaky.”
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