Energy Secretary Ed Davey has claimed that trust between the UK Government and the North Sea oil and gas industry is now “better than it has ever been”.
The Liberal Democrat MP said ministers were working hard to ensure the best tax regime was in place to encourage the sector to thrive.
Mr Davey spoke out yesterday after it was suggested the decision to introduce a bareboat charter tax had damaged relations.
The term refers to a rig or vessel without a crew and the new measure seeks to restrict the tax deduction UK companies can claim for them.
The industry has expressed fear it would damage exploration and development by pushing up costs and reducing rigs’ availability.
Mr Davey said changes had since been made to the tax, following consultation with the industry, and have been “quite welcomed”.
“I do not see this lack of trust, I see trust growing through partnership strengthening,” he added.
“I have heard people say it is better than it has ever been.”
Mr Davey said the UK Government had learned lessons from past decisions relating to the sector.
“We have seen the brown field allowances, small field allowances and we have moved on exploration and decommissioning,” he added.
“These are things that the industry has been asking for years and they are being delivered.”
Oil & Gas UK economic and commercial director, Michael Tholen, said the organisation was “heartened” by the UK Government’s endorsement of the Wood Review which he said was a strong signal of support for the industry.
“The introduction of the ultra-high pressure, high temperature cluster allowance will, we believe, stimulate production from the North Sea,” he added.
“We do regret that these positive steps forward were tempered by the new tax changes in respect of drilling rigs and accommodation vessels.
“We still feel this move to be counter intuitive.
“The industry supplied evidence of the negative impact this measure could have on exploration which is worryingly low.”