THE UK Treasury is to heed calls to slash the tax burden on the North Sea oil and gas industry, as the sector faces a growing crisis over investment and jobs.
Sources close to Scottish Secretary Alistair Carmichael confirmed last night that new measures were likely be included in the March budget, as oil prices fell again to around $45 a barrel, the lowest level since 2009.
The indication came after key industry figures met Mr Carmichael and Scottish Energy Minister Fergus Ewing in London yesterday, amid warnings that 15,000 jobs in the sector are on the line and firms are preparing to pull the plug on £2 billion worth of investment over the next 24 months as a result of the plummeting value of oil.
The UK Government has faced calls to act urgently in response to the dramatic decline in oil prices over the past six months, while the SNP has faced criticism after predicting in the run-up to the referendum that prices would remain at around $110.
"Mr Carmichael's personal view is that there should absolutely be tax relief for the sector," the source said. "Generally the mood in Government is to look at it in relation to the March budget. Measures were announced in the Autumn Statement, and we shouldn't lose sight of that, but the UK Government is to look at doing more. This is a difficult situation."
First Minister Nicola Sturgeon is to visit businesses in Aberdeen today and meet with industry figures. Ed Davey, the UK energy secretary and Mr Carmichael will visit the region tomorrow.
Following yesterday's meeting, Mr Carmichael said: "Both the UK and Scottish Governments have a range of powers they can use to help oil and gas companies, as well as those in the supply chain, and we should all be pulling together to help the industry weather the current storm.
"I and my Ministerial colleagues will be doing everything we can to help the sector and all of those employed by it, directly and indirectly throughout Scotland, emerge strongly from this difficult time."
Last week, the Scottish Government called for a reversal of a 2011 tax hike introduced by Chancellor George Osborne, as well as an investment allowance and financial incentives for exploration.
Industry body Oil and Gas UK said that Mr Carmichael and Mr Ewing had been left in no doubt about the seriousness of the issues facing the industry.
Mr Ewing said: "The meeting in London was a welcome opportunity to engage with industry leaders who agreed with the Scottish Government's call for urgent reform of the taxation regime for North Sea oil and gas.
"The Scottish Government is committed to a sustainable future for the oil and gas sector in Scotland and to working in partnership to secure maximum value for the economy, the industry and society."
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