Concerned:the UK Energy & Climate Change Select Committee
Committee pushes for step up in UK play
Up to 50,000 jobs could be at risk in the UK oil & gas sector next year if ministers do not set out a more “articulate” strategy on how to maintain production levels, according to a key report from parliamentarians.
“The oil and gas industry operating on the UK continental shelf currently faces a quadruple whammy of high costs, low prices, lack of affordable credit and a global recession,” said the report by the Energy & Climate Change Select Committee published today.
The cross-party committee, set up earlier this year to scrutinise the work of the new Department of Energy & Climate Change, has been hearing evidence on the country’s energy sector over recent months.
The report said that measures announced in the Labour government’s 2009 Budget to reduce the tax burden on companies operating off the UK were insufficient.
It added: “Ministers must set out what steps they are taking specifically to help oil and gas companies access affordable credit and confirm that they are keeping the availability of such credit under close review.”
The report said the new measures – the so-called value allowance - fail to incentivise investment in existing fields while qualification criteria are too stringent, the committee said.
Malcolm Webb, the chief executive of industry group Oil & Gas UK, who gave evidence to the committee, said: “The UK still has significant reserves of oil and gas but how much of these reserves are recovered will depend on a number of factors, not least of these being the economics of a mature, technically challenging and costly province.
“We therefore particularly welcome the committee’s clear understanding of the urgent need for Government action to give the right fiscal and regulatory signals to attract more investment to the UK. We are encouraged by the ¿ recognition that the measures announced in the last Budget don’t go far enough.
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