Lower Oil Puts UK Oil Industry Under Pressure

Plunging world oil prices are threatening jobs in the UK North Sea and ramping up pressure on George Osborne to introduce more tax breaks for oil and gas operators at his autumn statement next week.

The cost of Brent crude slumped below $76 per barrel – a new four-year low – on Thursday as Opec signalled it would not be introducing production cuts on the cartel dominated by Middle East producers.

“Every decrease by a dollar is a negative for the North Sea. Lower oil prices are not good for anyone in the industry and they could endanger jobs, there is no doubt about that,” said Uisdean Vass, oil and gas partner at law firm Bond Dickinson. Earlier this week an Oil and Gas Survey conducted by Aberdeen & Grampian Chamber of Commerce and sponsored by law Bond Dickinson, showed that for the first time since 2008, more operators and contractors were pessimistic about their North Sea activity than optimistic.

James Bream, research and policy director at Aberdeen & Grampian Chamber of Commerce, called on the chancellor to introduce new tax breaks at the autumn statement on Wednesday.

 
“Companies are not convinced they can get a fair return on their investment and in a global industry, it is very simple for them to move their capital elsewhere. The government must be aware that decisions in the next few months will also have a major impact on the £35bn supply chain that exists in the UK.”

Oil & Gas UK, the offshore industry’s lobby group, estimates that 440,000 people are employed directly or indirectly around the UK as a result of oil and gas extraction.

via The Guardian

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