The Scottish Government is calling on urgent reforms of the tax regime for the North Sea oil and gas sector.
Its new report is proposing an investment allowance to support fields that cost more to develop, which it claims will boost investment by between £20 billion and £37 billion and support up to 26,000 jobs every year.
It is also calling on introducing an exploration tax credit and a reversal of the increase in the supplementary charge on oil and gas production implemented in 2011.
Scottish Energy Minister Fergus Ewing believes the 2% reduction announced by Chancellor George Osborne last year “doesn’t go far enough”.
Mr Ewing added: “The oil and gas industry is a strong success story for Scotland and will continue to be. However, because of the mismanagement of oil and gas fiscal policy by the UK Government, challenges remain and we must tackle the on-going cost pressures and the fall in oil prices head on.”
Malcolm Webb, Oil & Gas UK’s Chief Executive said sharply falling oil prices are now “adding to the significant challenges the UK offshore oil and gas industry was already facing”.
He added: “If the Treasury’s new Investment Allowance is to have any impact it must be implemented by Budget 2015 at the very latest. However, with the oil price now at around $50 per barrel, it is becoming increasingly apparent that this measure is not enough and a significant reduction in the headline rate is required.”
A spokesperson from the Treasury said: “The government is working with industry leaders as a matter of priority to address the challenges the industry faces as quickly as possible and to maintain Britain’s energy security by maximising the economic recovery of our domestic oil and gas resources, offshore and onshore.”