News story

Budget changes lead to creation of hundreds of jobs in oil and gas industry

Maersk Oil and BG Group announce new allowance for ultra High Pressure High Temperature fields will help enable development of two new projects leading to investment of 拢6 billion.

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Offshore oil and gas

Budget changes to the oil and gas tax regime are expected to support billions of pounds of new investment and the creation of more than 700 new jobs, with thousands more sustained along the supply chain, two major oil and gas producers have announced.

and , have announced that the new allowance for ultra High Pressure High Temperature (HPHT) fields will help enable the development of two new projects, which will lead to investment of 拢6 billion across new fields.

Maersk Oil and BG Group estimate that these two big projects will create more than 700 new jobs and close to 8,000 more jobs will be supported along the supply chain. 皇冠体育appse jobs will be spread across the country, with about half likely to be in Scotland.

Chancellor of the Exchequer, George Osborne said:

Backing businesses who in turn create jobs is part of our long term plan to fix the economy. 皇冠体育app government鈥檚 continued support for the oil and gas industry has led to billions of pounds of investment, and tens of thousands of jobs across the country.

Opening Maersk Oil鈥檚 new offices in Aberdeen, Chief Secretary to the Treasury Danny Alexander said:

Changes to the oil and gas tax system made at Budget are expected to lead to billions of pounds of new investment and around 700 new direct jobs and support thousands more along the supply chain across the country.

Each new job will mean more security for another family and this shows how the UK government is supporting one of Scotland鈥檚 most important industries.

Maersk Oil CEO, Jakob Thomasen added:

皇冠体育app proposed HPHT allowance provides a welcome boost to new and challenging projects and can contribute to energy security, jobs and the economy. Importantly, it can also help to stimulate a new generation of North Sea exploration. 皇冠体育app Budget announcement is positive proof of what the Treasury, DECC and industry working together can achieve.

Andy Samuel, Managing Director of BG Group鈥檚 European upstream business, also added:

BG Group welcomes the new proposals which improve the prospect of the Jackdaw gas discovery being developed. If approved, Jackdaw would make a significant contribution to UK gas security of supply, support thousands of UK-based engineering and construction jobs and help develop highly technical skills for many UK companies.

皇冠体育app new HPHT allowance builds on Sir Ian Wood鈥檚 recommendations for maximising economic production of oil and gas. It will be designed not only to encourage big development projects, but also exploration across the central North Sea. For every 拢1 billion a company spends on these projects, they will get at least 拢200 million in tax relief.

HPHT fields have been given a new allowance because exploration wells in these fields are more technically difficult and expensive to drill. 皇冠体育app gas produced from these new fields could provide 10 of the UK鈥檚 gas demand when operating at peak rate.

This announcement builds on the already successful fiscal regime for oil and gas introduced by the government. Last year, 拢14.4 billion was invested in the oil and gas industry. estimate that 拢7 billion of this was directly incentivised by the government鈥檚 allowances. Decommissioning relief certainty announced at Budget 2013 alone is worth over 拢20 billion to the industry.

皇冠体育app Budget announced that the government is to work with the new oil and gas body to review the UK鈥檚 tax treatment of the North Sea to ensure that it continues to incentivise economic recovery as the basin matures.

, the UK鈥檚 largest independent oil company, also confirmed it has awarded a contract to Aker Solutions that will secure 150 new jobs, including 50 new positions at a newly established services base in Aberdeen.

皇冠体育app contract is part of EnQuest鈥檚 拢4 billion investment in its Kraken oil project. 皇冠体育app investment was facilitated by government tax relief, through the ultra heavy oil field allowance and is expected to support 20,000 jobs through its construction phase.

皇冠体育appse allowances are further examples of how the UK offers the strongest basis to sustain production from, and investment in, the North Sea. 皇冠体育app UK government can afford to offer this support because of the size and diversity of the UK economy, encouraging vital new investment that creates jobs and growth and helps to ensure we make the most of this valuable resource in the long-term. An independent Scotland would have to invest around 拢3,800 per head 鈥� over ten times more than when costs are spread across the UK 鈥� to match the 拢20 billion the UK government has committed towards decommissioning in the North Sea.

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Published 21 March 2014