Oil Industry Action Plan Set Out
10 March 2015, 07:05
Policymakers responsible for oil and gas industry taxation and regulation should be relocated from London to Aberdeen, a think-tank has said.
Business organisation N-56 has set out a five-point action plan for the North Sea oil and gas industry in a letter to First Minister Nicola Sturgeon and UK Chancellor George Osborne.
The group wants key decision-making functions, including HM Treasury oil and gas taxation and the Scottish Government's energy directorate, to move closer to the industry.
N-56 said this would build on the decision to locate the new regulator, the Oil and Gas Authority, in Aberdeen and mirror the way of working in Norway.
The recommendation is included in the organisation's latest report prepared by economic consultancy BiGGAR Economics and part of a series entitled Scotland Means Business.
Dan Macdonald, founder of N-56 and former Yes Scotland advisory board member, said: "90% of oil and gas reserves lie in Scottish waters.
"It is vital that those policy and decisionmakers responsible for taxation and regulation of the sector are located in Aberdeen where development of the industry is properly understood.
"We can then ensure the delivery of a sector that is responsive to those most impacted by it.''
The report also calls for a tax regime designed to maximise economic impact of the sector, a hydrocarbon investment bank to boost investment, a Norwegian-style long-term strategy to fully exploit reserves left in the North Sea and measures to encourage research and development into offshore fracking.
It was published as MSPs prepare to debate the oil and gas sector at Holyrood and in the run-up to the Chancellor's March 18 Budget statement.
Mr Macdonald said: "It is critical that exploratory development and the future potential of our North Sea resources continues unabated and that we are prepared for short-term slumps, as well as the long-term highs that have seen the massive positive flow of tax revenue from which the UK has benefited.
"The five-point action plan, outlined in our letter to the Chancellor of the Exchequer and First Minister, will ensure that the remaining potential of Scotland's offshore oil and gas reserves is maximised, with strategic refinement.
"The urgent necessity of both administrations working together on delivering this can't be understated.''
Welcoming the report, energy minister Fergus Ewing said: "We compete for investment with other basins all over the world. Right now we are not competitive because both costs and tax are too high.''
A Treasury spokeswoman said: "The Government is following developments in the North Sea closely and is working with industry leaders as a matter of priority to address the challenges the industry faces.
"In December, the Government announced an ambitious programme of reform across the oil and gas tax regime, including an immediate tax cut and a consultation into a new streamlined allowance designed to reward investment in the North Sea.
"Treasury ministers have been clear that they will go further at Budget if needed.
"The North Sea is a great national asset and we want to continue to maximise investment to make sure it keeps providing jobs and economic benefits to the whole of the UK for many years to come.''