North sea tax breaks are working, says Deloitte

The area also attracted strong interest in development zones, with the Department of Energy and Climate Change confirming 219 awards, which Deloitte said indicates large-scale interest in the North Sea.

However, uncertainty surrounding the outcome of the Scottish referendum could see some IOCs and investors hold back in the region this year, according to Georgina Kladis-Kalentzi, senior manager at Deloitte and an author of the review of oil and gas development in north-west Europe.

Her comments come after Michael Fallon, the energy minister, warned this week that the referendum on Scottish independence in September could see investors “pause” before deciding to increase their exposure to the North Sea.

Mr Fallon has specifically questioned an independent Scotland’s ability to continue to fund the tax allowances that Deloitte says are helping to extend the life of the North Sea.

Deloitte’s report comes ahead of the Government receiving the final recommendations for the future of the North Sea from Sir Ian Wood, the former head of oil and gas engineering company Wood Group. His findings are expected to increase the amount of oil recovered from the area by up to 4bn barrels of crude and boost investment in the region.

More than 40bn barrels of oil equivalent have already been produced from the North Sea and estimates of remaining reserves are between 12bn and 24bn, based on what may be viable to extract.

Last year, Sir Ian published an interim report into how to secure the long-term future of the UK Continental Shelf, which made a number of recommendations on how to ensure continued investment.

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