Offshore leaders are poised to find out if UK ministers will move to resuscitate the North Sea sector – or stand by as price falls hammer a “nail in the coffin”.
Chancellor George Osborne is under pressure from oil and gas chiefs to provide new tax breaks for the industry when he delivers his Autumn Statement to MPs today.
The Treasury is due to publish its review of the North Sea tax regime, which was launched at the Budget in March, against a backdrop of plummeting world prices and soaring costs which experts fear could put projects and jobs at risk.
In an exclusive interview last month, Chief Treasury Secretary Danny Alexander revealed to the Press and Journal that the review would pave the way for “an even more positive tax environment” for the North Sea.
It is understood that the chancellor will announce aspects of the reforms in his statement today, before Mr Alexander travels to Aberdeen tomorrow to unveil the full package.
Martin Findlay, head of tax for consultants KPMG in Aberdeen, said last night the details would be eagerly anticipated by the industry.
“The dramatic fall in the Brent crude oil price to a new five-year low on Monday has serious implications for North Sea oil production and government revenues,” he said.
“The report by Sir Ian Wood in February 2014 talked about maximising oil recovery in the North Sea. The recent price dip could be the nail in the coffin for achieving that.
“Many of the operators are struggling with containing their costs, accessing aging infrastructure to bring the oil to the UK, and making any new finds worth developing under the current tax regime.
“The industry will be waiting for some good news in the Autumn Statement or there could be some very glum faces in the industry.”
Former Scottish Secretary Jim Murphy, a contender for the Scottish Labour leadership, listed North Sea tax reform among five key tasks for the chancellor today.
He said Mr Osborne must deliver “action to reduce inequality, help people back into work, tackle the cost of living crisis, secure jobs in the North Sea and invest in our NHS”.
Mr Osborne is expected to be heavily criticised after official figures confirm today that he has missed a series of targets on cutting debt, borrowing and balancing the books.
Stewart Hosie, SNP deputy leader and Treasury spokesman, said: “Chancellor Osborne must use tomorrow’s statement to explain why he has failed to meet a single one of the economic targets he set himself when the Tories came to power four years ago.
“Despite promising recovery all we have had is austerity from the broken promises chancellor.”