Chancellor Osborne Pledges More to Help North Sea Oil Industry

north sea production oil rig farstad
North Sea production rig, file image (c) DJ Mattaar/shutterstock.com

By Svenja O’Donnell and Alex Morales

(Bloomberg) — U.K. Chancellor of the Exchequer George Osborne said he’s likely to announce further steps to help Scotland’s North Sea oil and gas industry.

The falling oil price “has had a hard impact on the oil and gas sector,” Osborne told Parliament’s Treasury Committee in London today. “We want to make sure we maximize investment in the North Sea, and so I can see we are going to have to take further steps to support that industry. That’s why we are a United Kingdom.”

Osborne said these measures would likely be set out during his budget speech on March 18, which will be his last before elections in May.

Oil prices have fallen by 54 percent over the past six months. While the drop helped bring inflation down to match a record low in December — a move Osborne hailed as good news for British consumers — it has hit North Sea oil companies, which require a higher price of crude to be profitable. BP Plc has already announced 300 job cuts in the region, saying it needs to remain “competitive.”

Energy Secretary Ed Davey said on Jan. 15 he’d asked Andy Samuel, the chief executive officer-designate of the country’s Oil and Gas Authority, to lead an “urgent” commission that will identify the risks to domestic production caused by the slide in oil prices and identify extra measures the government can take to alleviate the effects. Samuel was asked to report the findings by the end of February.

Copyright 2015 Bloomberg.