Sir Ian Wood Warns Government about North Sea Future
Posted on: 20/02/2015

Sir Ian Wood, founder of Wood Group, one of the UK’s largest oil and gas companies, has spoken out to the government issuing harsh warnings about the reality of government’s tax regime.

He warned that unless radical reformation is made to the tax regime for offshore drilling that over 6bn barrels of oil reserves- approximately a third of what remains unclaimed from the North Sea bed- will have to be abandoned.

In an interview with the Sunday Telegraph a few weeks previously Sir Ian said :”The danger is that if we lose momentum now and lose recourses and assets, and don’t get the fiscal regime fit for a quite highly mature area, we will come down to 10-11bn (oil reserves). That’s a huge economic loss and jobs loss for the UK.”

George Osborne, the UK Chancellor, is currently under extreme pressure to introduce tax relief and direct funding to encourage exploration in the North Sea- something which will only be fully revealed in his final budget in March. A substantial number of jobs (over 450,000 at last count) are supported by the oil and gas industry within the UK, so the continued life of the North Sea is a fundamental concern for many.

However concerns grow stronger as days go by and oil prices remain low. Last week, two of the largest British oil and gas companies, BP and BG Group, showed their distress after announcing falling profits and were forced to cut billions in spending to account for these profit declines.

Andrew Gould, executive chairman at BG Group, said: “I don’t think you can really, at these oil prices, hope for a major resurgence of the North Sea on the basis that there are a lot of other places in the world where the reserve life is a lot more promising than it is in the UK sector of the North Sea.”

It is also recognised that globally there exists much cheaper sources of Oil than from the North Sea; that is why such emphasis has been placed on the need for UK government tax reliefs to act as a life line for the North Sea sector.

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