Lingering concerns for oil and gas industry over fiscal instability

Scotland's oil industry continues to feel concerns over the country's fiscal regime following the UK Government's 2011 budget.

Last year UK Chancellor George Osborne announced that oil companies would face £2bn of new taxes on their windfall profits.

The industry warned that the tax rise could cost put jobs and billions of pounds of investment at risk over the next ten years.

An annual oil and gas sector study reveals continuing concerns over the "unexpected" budget announcement and the potential repercussions.

At the same time, the survey, by Aberdeen & Grampian Chamber of Commerce (AGCC), found that the oil and gas sector continues to outperform the rest of the Scottish economy, with demand for employment remaining strong and more activity planned.

A question on the planned referendum on Scottish independence found that one in three companies consider it a factor in their plans for future investment in the country.

Robert Collier, AGCC chief executive, said: "The oil and gas sector has helped ensure Aberdeen city and shire has remained largely sheltered from the current economic downturn facing the rest of the UK and its importance to the region cannot be underestimated.

"This survey helps develop chamber policy and for the first time included a question on the proposed referendum on Scottish independence. Results were inconclusive and we plan to repeat the question in future editions to monitor any trends or changes in responses."

Paul Stockley, joint head of oil and gas at Bond Pearce, which sponsored the survey, said: "While the survey confirms that the future is looking considerably brighter than it was at this time last year, it also raises concerns about safety regulation, skills shortages and local infrastructure which we in the industry must work together to act upon.

"There is significant unease about the possibility of the European Commission taking over regulation of offshore oil and gas safety, which we believe could be a dangerous mistake.

"The UK, post Piper Alpha, has demonstrated that it has the strongest and most robust regime globally. The EU proposals are not only unnecessary and unworkable, but may undermine the UK's high safety and environmental performance."

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