The Oil & Gas UK lobby group claims that the North Sea oil industry is still thriving and has the potential to create thousands of jobs. These claims come after a financial watchdog published a report stating that the North Sea oil industry would require subsidies from the Treasury over the next five years if it wanted to survive.
The lobby group said that the sector had witnessed a £19 billion investment in a number of new projects near Shetland and other places. This is evidence that the industry, which is reeling under the falling oil price, is still going strong. This is good news for oil and gas contractors.
A spokesperson for Oil & Gas UK said that the oil and gas industry in the North Sea was a natural resource that has contributed £330 billion in taxes over the last 40 years, and that this industry had never been subsidised. The spokesperson also stated that there is a huge potential for millions of pounds in taxes in the future after the oil price recovers.
However, many critics believe the North Sea is no longer as vibrant as it used to be, and hence the UK Government should not provide the £1 billion tax break package, especially when greenhouse gas-producing fossil fuels should be eliminated.
The Chancellor has abolished the petroleum revenue tax and also halved the supplementary charge for offshore oil and gas operators after the Office for Budget Responsibility predicted that the operators would not be contributing any tax this year. The Office also predicted that from 2017, the Treasury would be doling out £1 billion annually to the oil and gas industry in the form of subsidies.
Richard Howard, from the think tank Policy Exchange, said that the UK was still dependent on fossil fuels, and if the Treasury did not take measures, the global operators operating in the North Sea would shift base elsewhere and the North Sea oil industry would decline very quickly.