New exploration in the North Sea will be supported by a £5m UK Government fund for 2018/19, Philip Hammond announced today during a visit to Aberdeen and Dundee.
The funding will be used by the Oil and Gas Authority (OGA) to survey under-explored areas of the UK Continental Shelf to find potential new deposits.
The announcement came on the same day that the Oil & Gas Technology Centre in Aberdeen, which the Chancellor visited and is part-funded by the UK Government, said its work with industry on new subsea technologies could help unlock 400 million additional barrels of oil and gas from the North Sea and £3 billion of additional value to the industry.
Chancellor of the Exchequer, Philip Hammond, said: “The oil and gas industry remains vital for the Scottish economy and the UK as a whole. The £5m funding I am announcing will help exploration to find potential new deposits, and boost prospects for jobs in Aberdeen and the surrounding area. This continues the UK Government’s extensive package of tax and funding support for the industry and the wider Scottish economy.
“I’ve seen today how Dundee has benefitted from our life sciences and creative sector funding. I now look forward to progress being made on the Tay Cities Deal, which will follow the £1 billion already committed by the UK to Scotland’s City Deals so far.
“This government will continue using the UK’s broad shoulders to provide Scotland with the skills and support it needs to thrive in the future.”
UK Energy Minister Richard Harrington said: “North Sea oil will continue to fuel growth and jobs across Scotland and the rest of the UK, with an estimated 10-20 billion barrels still remaining.
“I was in Aberdeen last month and saw first-hand the work of the Oil and Gas Authority which we established to be a strong, independent regulator focused on maximising economic recovery.
"The sector continues to have the full support of the UK Government, confidence is returning, and today's announcement recognises there are great opportunities for further exploration."
Earlier in the day, the Chancellor met local businesses in Dundee to discuss how UK Government tax support has helped them grow, including reducing corporation tax and introducing creative sector tax relief. The waterfront regeneration underway in Dundee includes the stunning new V&A museum currently under construction, supported by £5m UK Government funding.
Philip Hammond also visited Dundee University life sciences complex, which is a world leader in areas including drug discovery. It has received more than £20 million in UK Government funding in recent years and is now ranked highly on global ratings for its scientific excellence and impact of its research.
In Aberdeen, he met oil and gas industry representatives to discuss how the £5m funding could help employment and the economy in the region. The UK government has given substantial support to the oil and gas sector, including a £1.3 billion package of tax cuts at Budget 2015 and a further £1 billion package at Budget 2016.
The UK internal market is the most important for Scotland’s economy. Scotland sells four times as much to the rest of the UK as it does to the entire EU, for example, and the UK is currently working to protect the benefits of this market, and provide continuity and certainty as we prepare to leave the EU.
The UK government is also backing plans to establish Aberdeen as a global leader in decommissioning, creating skilled jobs and exporting this advanced knowledge to other countries. Tax relief for decommissioning is in place, covering around 40% of the total cost for UK companies and forecast to be worth around £24 billion between now and the 2050s. The OGA has also committed to reduce the overall costs for industry.
Commenting on the Chancellor of the Exchequer's visit to Aberdeen, Oil & Gas UK Chief Executive Deirdre Michie said: “It’s good to see the Chancellor here in Aberdeen. His visit sends a strong message of support for industry and his funding announcement to help stimulate exploration - that has been particularly hard hit by the downturn - is a welcome boost.
“I look forward to meeting the Chancellor and will use this opportunity to update him on the progress industry has made in terms of improving costs and efficiency.
“The UK Government has already made some positive changes to our fiscal regime which have helped reposition the basin as globally competitive.
“Building on this, we need HM Treasury to maintain its commitment to the Driving Investment plan and also enable transferable tax history in the Autumn Budget, which we believe will further unlock the transfer market for late-life assets, encourage more investment, and delay decommissioning for as long as possible with the associated benefit to the Exchequer and the UK.
“We are also seeking a strong partnership with Government to support our world-class supply chain and help it capture a greater share of the export market.
“This is an industry that makes an extraordinary contribution to the UK economy - helping meet our energy needs, making an estimated contribution of £17 billion to the UK’s balance of trade and supporting 300,000 jobs across the UK. Our supply chain also exports almost £12 billion exports of goods and services around the globe.
“With the right support from Government, and a relentless focus on efficiency from industry, we can maximise our domestic resources, while anchoring our supply chain here in the UK for the long-term.”