Oil and gas industry leaders have had a ‘full and frank discussion’ with the Energy Secretary about their concerns over the Budget tax hike.
They called for an emergency meeting after Chancellor George Osborne announced £2 billion of new taxes on the windfall profits of oil companies last week designed to fund a 1p-a-litre drop in fuel duty.
Industry leaders had warned that tens of thousands of jobs could be jeopardised by the move.
They discussed their concerns at a meeting of PILOT, the Government-industry forum established to help maximise recovery from the UK continental shelf.
Speaking after the meeting, Energy Secretary Chris Huhne said: “We’re going to be considering some of the points that they made.
“They expressed their concerns about the impact of the Budget on investment in the North Sea oil and gas sector, and we’re listening to that and we want to understand it more carefully with detailed figures and we will take that away.
“There are elements of what the Chancellor announced which were up for consultation including the issue of the oil price at which the fair fuel stabiliser operates.”
Justine Greening, Economic Secretary to the Treasury, who was at the meeting, said they will work with the industry to put the fair fuel stabiliser in place in a “responsible way”.
Oil & Gas UK chief executive Malcolm Webb said: “The meeting recognised the concerns arising out of the new measures in the Budget for gas fields, new field developments, decommissioning, mature fields, infrastructure and the supply chain.
“The Government wishes to engage with the industry to investigate whether the negative impacts of the tax increase can be mitigated.
“Furthermore, agreement was reached that the Government and industry should work together with a view to ending, by Budget 2012, the instability of the UK oil and gas tax regime and the problems of uncertainty around decommissioning reliefs.”
He said a meeting is to be arranged between industry and the Chancellor of the Exchequer.
It has emerged that energy giant Statoil has halted work on a North Sea development following the Chancellor’s decision to increase tax on the industry.
In late April the industry will publish a survey outlining the impact the tax increase would have on its members’ current and future investment if left unchanged.
Scottish Secretary Michael Moore was also present. He said: “The future of the oil and gas industry is important to Scotland and to the whole UK economy, and we want to work with its representatives to ensure they have the stability and profitability that they need for the long term.
“Given that the oil and gas industry is expected to make unexpectedly large profits of around £24 billion this year, the government took the view that this could still be achieved after taxing part of that profit in order to fund a cut in duty at the pump for families and businesses.
“Today we listened carefully to the points made during the meeting and we have reaffirmed our commitment to work with the industry as a whole on the implementation of the fuel stabiliser and the price at which it operates.”
Greening said: “We put forward a reduction in fuel duty at the Budget rather than the planned increase and that has to be fully funded so we will progress with our plans.
“But there is an element of that which is around how we put in place the fair fuel stabiliser and we will now work with the industry to make sure we can do that in a responsible way.”