Scottish Energy Minister Fergus Ewing has made an 11th-hour plea to Westminster over a fresh tax raid on the North Sea.
Chancellor George Osborne is facing mounting pressure over his decision to slap an extra tax on rigs and flotels coming into the North Sea to carry out work – a practice known as bareboat chartering.
The Treasury says it will cost the sector in the region of £175million per annum – but industry insiders say it could cost up to £1billion in total.
The UK is already in the midst of an “exploration crisis” and industry chiefs fear the new tax will drive rigs away at a time they are needed more than ever.
Mr Ewing has written to the UK Government urging it to rethink the “damaging” raid.
“As Scotland’s Energy Minister – but without crucial powers over these matters – I am seriously concerned the UK Govern-ment’s plans could undermine industry confidence and destabilise future North Sea investment,” he said.
“This, like decisions of successive Westminster governments to spend Scottish oil revenues rather than invest a proportion of them, is a major mistake and also goes against the spirit of the Wood Review by clearly inhibiting the business conditions necessary to encourage investment in the exploration, appraisal and development that is needed to maximise economic recovery in the North Sea.
“It was curious to say the least, that this measure was brought in in the same budget the UK Government pledged it would take forward the Wood Review and review the oil and gas fiscal regime.”
He added: “In my letter to the Chief Secretary to the Treasury (Danny Alexander) I argued that this oil exploration tax should be reversed because it could reduce the availability of rigs and increase the costs of production, with potential impacts on investor confidence and exploration activity.
“To date the North Sea has suffered from poor stewardship from successive UK Governments. There have been numerous substantial changes to the fiscal regime over the last decade and a conveyor belt of 14 oil ministers in the last 17 years. The time has come to end this mismanagement once and for all.
“This action substantiates the industry’s perception that there is a distinct lack of awareness within the UK Government as to what is required to support and sustain the offshore oil and gas industry.”