CEO Malcolm Webb said: “Evidence of the threat from thefalling oil price to UK investment and jobs is mounting daily with oil and gas companies cutting exploration and capital budgets and reviewing headcounts.
“The Treasury’s promise in last year’s autumn statement of a simplified tax allowance to encourage new investment must be delivered by budget 2015 if it is to have any impact. However, with the continued falling and potentially sustained low oil price, this is no longer enough.
“We are encouraged to see a growing political and industry consensus around the now pressing need for more fundamental and urgent changes to thetax regime. With a significant amount of UK oil and gas production not even covering costs at a $50 oil price, the industry cannot carry the burden of a tax rate between 60 and 80%.”
Webb called for Chancellor George Osborne to abolish the 30% supplementary charge on corporation tax in his March Budget, assuming the oil price has not recovered. This was introduced and then increased in 2011 response to rising oil prices.
Such a change would still leave UK North Sea oil and gas producers paying corporation tax at 30%, 50% above the level imposed on the remainder of British industry.
“In parallel, the Oil and Gas Authority must be rapidly resourced with the right capability and capacity to swiftly implement the recommendations of theWood Review,” Webb said. “The industry is resolutely focused on tackling the cost and efficiency challenge it faces to improve the competitiveness of North Sea operations.”