On Wednesday 3 December, in his much anticipated Autumn Statement on the budget, UK Chancellor George Osborne pledged an immediate cut of two percentage points in the oil and gas industry’s tax rate, which OGUK welcomed.

The following day, Danny Alexander, Chief Secretary to the Treasury, met with industry figures in Aberdeen to discuss further measures to ease the fiscal burden on operators amid rising costs, ageing assets and low oil prices.

The proposals announced include:

• The possible transferability of decommissioning tax reliefs;

• Reforming the fiscal treatment of infrastructure;

• A basin-wide ‘investment allowance’ to simplify and replace the existing system of offshore field allowances; and

• Measures to stimulate exploration, including financial support for seismic surveys in underexplored offshore areas and further discussion on possible fiscal measures, such as tax credits.

OGUK welcomed the proposals, and said they showed a “spirit of co-operation”, but also warned that there was no time to delay.

“We are pleased that the government has responded positively to many of the concerns we raised during the consultation,” said Michael Tholen, OGUK’s economics and commercial director. “In particular, we asked for the current, complex portfolio of different allowance types to be simplified and the proposed investment allowance will, we hope, do just that. This new allowance will of course need to be pitched at the right rate.”

“However,” he added, “we are all in agreement that actions speak louder than words. There is no time to delay, we are at a critical stage in the life of the North Sea and look forward to the Chief Secretary’s proposals being swiftly implemented.”

“A spirit of co-operation was very much in evidence today,” said OGUK chief executive Malcolm Webb after the meeting. “We are encouraged to note that fiscal policy will now be framed in the context of the sector’s wider economic benefits and will also take account of the global competitiveness of the industry in terms of commodity prices and costs.

“Mr Alexander paid particular attention to the need for the Treasury to work with the new Oil and Gas Authority (OGA) and the industry in the tripartite approach as called for in the Wood Review, a view which Oil & Gas UK fully endorses and is committed to promote.

“We are encouraged by these proposals but must now swiftly act on them given the current challenges facing the industry.”