TAXPAYERS may have to bear the burden of the multi-billion pound costs involved in the North Sea’s decommissioning programme unless the UK Government takes action now, according to a new report.
Research by the GMB union has shown that taxpayers will be liable for a significant share of the costs over the next 40 years with an increasing cost to the Treasury because of the current system of tax refunds to oil and gas companies.
An urgent investment programme is needed to make Scottish fabrication yards and ports “decommissioning ready”, says the report.
“If we don’t act fast then it could mean the worst of all worlds: a chance to boost economic and employment prospects gone and the taxpayer paying for the clean-up of the North Sea while other countries profit from decommissioning at our expense,” said the GMB’s Scotland Secretary Gary Smith.
“All of us are going to pay for North Sea decommissioning so the least that our governments can do is to take the appropriate action to ensure more of our own money is redistributed back into our economy and not into the pockets of largely overseas-based oil and gas contractors.”
The findings come at the same time as a call for the UK Government to honour its pledges to the struggling sector.
Nine months after the UK Government’s March Budget there has been no action on the commitment to use loan guarantees to support infrastructure investment, which could help the sector access a further two billion barrels of oil and gas. Analysis of fields already nearing decommissioning has identified that the remaining value of these assets could increase by more than 50 per cent, or almost half a billion pounds, if there were successful measures to reduce costs and increase production. This could also have future benefits for other fields that are currently in earlier stages of their production cycle.
Minister for Business, Innovation and Energy Paul Wheelhouse today called on the UK Government to meet its obligations as part of a two-day visit to Aberdeen to co-chair the oil and gas industry leadership group and meet with companies.
“The UK Government retains control of the key taxation levers affecting the sector and must take the action needed to protect businesses and jobs,” he pointed out.
“Last week’s decommissioning insight report from Oil and Gas UK highlighted the £17.6 billion decommissioning opportunity over the next 10 years and the need for HM Treasury to work with the industry to attract fresh investment, avoid premature decommissioning, and ensure decommissioning is carried out in a cost-effective manner.
“Without greater investment and activity we risk losing vital capacity and skills that will support production and ensure we maximise economic recovery from the North Sea.”
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