THE boss of Shell has urged Chancellor George Osborne to cut the tax on the profits made by the North Sea oil and gas industry.

 

Chief executive Ben van Beurden's comments came as hundreds of jobs have been cut or scaled back by oil firms as the product's price has slumped.

Mr van Beurden called for Mr Osborne to use his final Budget before May's General Election to cut a levy, worth 30 per cent. He said it is putting a significant burden on the profitability and viability of the North Sea industry.

It came as Mark Carney, the Governor of the Bank of England, suggested that Scotland had been shielded by 90 per cent of the impact of the prices, which are below $50 a barrel, because of the financial shared risk that involves being part of the UK.

The Shell boss said: "I think there needs to be look at how the tax position is really hindering at this point in time the viability of the industry," he said.

After the oil and gas giant announced plans to slash its global spending by $15bn (£10bn) over the next three years, Mr van Beurden said the company has to make hard choices in the North Sea following the near 60 per cent fall in the price of Brent crude since June.

He said: "The North Sea already was a tough place if you look back before the oil price drop; a place where we saw falling production levels, rising cost levels, very high tax, ageing assets. So it was a tough place. It just got tougher."

He said Shell does not have any plans to close any North Sea fields.

However, Mr van Beurden declined to rule out the company cutting North Sea jobs this year, saying there are no guarantees in life.

Last year the company shed 250 jobs in the North Sea arm's headquarters in Aberdeen.

Shell employs around 4,500 staff and core contractors in its exploration and production business in Scotland and off the country.

A number of other firms have shed, or are planning, to reduce their workforces. Around 300 jobs are to go in BP's North Sea fields.

"We will look at areas where we have high costs and the North Sea is one of those areas. Whether that always needs to translate into job losses is a different story," said Mr van Beurden.

Mr van Beurden said there is still a future for the North Sea industry, albeit in a modest form than in the past.

Meanwhile, David Cameron's spokesman said the PM was considering representations ahead of the Budget in March.

He said: "We have seen a number of major oil and gas firms considering the impact of recent changes and falls in the oil price.

"In a sense, it all goes to underline the importance of the Government working with all parts of the North Sea oil industry to ensure we are doing as much as we can to support that industry and to ensure there is a maximising of the potential of that industry into the medium and long term."

Meantime, Mr Carney said how fiscal stabilisers such as welfare spending played an important role in sharing risks across individuals, sectors and regions, thus reinforcing the resilience of the UK's currency union.

Danny Alexander, Chief Secretary to the Treasury, said: "This shows how Scotland benefits from being part of the UK, where its broader financial shoulders can cushion against the volatility of the oil price.

"The falling oil price would have devastated public services in an independent Scotland."