The UK Government was under growing pressure last night to take action to avert an “exploration crisis” that could risk thousands of jobs in the North Sea.
MPs and the Scottish Government backed a call from trade body Oil and Gas UK for “urgent” measures to prevent a “collapse” in spending.
A total of 48 new wells were opened up in the North Sea in 2006 and 2007, but a drop in exploration led to just 15 being drilled last year.
Malcolm Webb, who heads up Oil and Gas UK, warned in the Press and Journal and Energy Voice yesterday that offshore exploration was in a “parlous state”, despite record levels of investment in recent years.
Sir Malcolm Bruce, the Liberal Democrat MP for Gordon, called in earlier this month for the Treasury to consider introducing new tax breaks to stimulate exploration.
He said yesterday that he was “letting it be known” amongst his colleagues in the coalition government that action was required.
“My view is that there needs to be an incentive for exploration, and there are many ways to do that,” he said. “Wells are very expensive and of course it’s a long time before you can get any money back.
“The government needs to realise that exploration levels are too low and they need to engage with the industry to stimulate exploration, and tax breaks would be one way to do that. It’s as much in the interests of the government as anyone.”
A Scottish Government spokeswoman said: “As the industry themselves make clear, investment in the North Sea is booming at all-time record levels. But that investment needs to be matched by government policies which encourage exploration, something which Westminster has consistently failed to do.
“We have made a commitment to formal consultation before any changes are made to the fiscal regime – a pledge the UK Government has failed to match.”
A Treasury spokes-woman said: “The government is supportive of the oil and gas industry and values the level of investment and jobs that it provides.
“Last year we introduced Decommissioning Relief Deeds to provide certainty on decommissioning costs, and have introduced new and extended field allowances that have resulted in greater investment in the North Sea.”