LONDON--Scotland's energy minister urged the British government on Tuesday to ease the tax burden on the North Sea oil industry to help it cope with sliding crude prices.
Fergus Ewing, a member of the Scottish National Party (SNP) that holds power in the devolved government in Edinburgh, told AFP that "we face serious challenges".
The industry "will come through these difficulties but the industry does need the support of government on a long-term basis -- and that sadly has what has not happened thus far", he said in an interview.
When oil prices were high, North Sea oil was a boon for the British economy, and Prime Minister David Cameron's government increased taxes on the industry by 12 percent in 2011.
But Brent North crude oil, the industry benchmark, dived to $46.40 a barrel on Tuesday, the lowest level since March 2009 -- and Ewing said it was time for London to offer more support.
In March, Cameron's finance minister, George Osborne, will unveil his final budget before May's British general election, and the SNP government is hoping for three measures "to restore confidence in the sector".
Ewing called for state financial support for investing in new and existing oil fields, a tax credit to boost "the disappointingly low level of new exploration and appraisal drillings" and the removal of the 2011 tax hike.
"The measures are urgent because we face very serious challenges," Ewing said.
He added: "Of course, we have challenges on costs, on industry costs, that's for industry to deal with."
Global oil prices have slumped by almost 60 percent since June, as the market faces abundant supplies and demand weakness in a stuttering global economy.
The slide accelerated in November when the Organization of Petroleum Exporting Countries (OPEC) maintained its production ceiling at 30 million barrels per day.
Tumbling oil prices make exploration projects less affordable for energy companies, including those operating in the North Sea off the coast of Aberdeen.
The oil industry employs about 225,000 people in Scotland, generating £17.7 billion ($26.9 billion, 22.8 billion euros) in revenues for the regional economy in 2013, according to Scottish Development International.
The level and distribution of oil revenues were a major issue in the run-up to last year's referendum on Scottish independence, which the SNP lost.
Estimates for this year are on course to be significantly lower because of the oil price plunge and should it continue.
North Sea reduction peaked in 1999 and has fallen sharply since then owing to ageing infrastructure, including pipelines and platforms, and the depletion of existing resources.
AFP
