09 Jan 2015 | 02:16 pm | 2 min. read
Further tax cuts for the oil and gas industry should be amongst Chancellor George Osborne’s New Year resolutions, claims leading energy lawyer Bob Ruddiman.
Head of Energy and Natural Resources at Pinsent Masons, he said: “If Chancellor George Osborne wanted to show the energy industry some genuine New Year resolution he would consider further tax cuts without delay.”
Ruddiman played down claims of a North Sea industry meltdown and said certain steps should be taken to ensure the UK Continental Shelf remain sustainable and competitive in the face of a low oil price in the medium term.
Aberdeen-based Ruddiman said: “Contrary to the hysterical claims by some pundits, the North Sea oil and gas industry is not going to end tomorrow, but the new landscape in which we operate has brought in to sharp focus the question of why the tax burden remains so high.
“Contrast this with other industries which have had ongoing support, for example the initiatives to reintroduce car manufacturing in to some UK regions, and it’s little wonder E&P companies feel aggrieved.
“Successive governments have failed to understand the requirement for a mature, long-term energy policy, instead taking a short-term view involving regular tinkering with tax rates. I would hope that has now come to an end and Mr Osborne will take a more progressive approach in 2015 to show support for what is one of the country’s most important industries.”
The big challenge in the months and years ahead is in ensuring the UK continues to have sustainable domestic production which allows the ongoing development of a supply chain which is relevant and world class, added Ruddiman.
He said: “One of key themes to emerge from the Wood Report was the need for greater collaboration, and while there has been well-meaning and wide ranging statements of good intent, that must be transformed in to action.
“The new industry regulator, the Oil and Gas Authority (OGA), has to play a central role in working for the greater good. There is certainly an eagerness from the industry to become engaged with the OGA, but that is hampered by practical challenges, with the required legislation still to be passed by Parliament and the recruitment of Andy Samuel’s team to be completed.
“The Government is doing what it can, but it is imperative that the OGA is up and running as quickly as possible and using the powers envisaged in the Wood Report for the benefit of all engaged in exploration, production and decommissioning.
“While the oil price is a concern, let’s not forget the global demand for oil and gas remains high and we still have significant hydrocarbon resources in the UK, backed up by a world-class supply chain. You don’t need a crystal ball to predict the UK will continue to be a significant producer of oil and gas for the foreseeable future, provided all stakeholders work together towards that common goal.”
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