700 jobs created as North Sea projects move ahead

Maersk Oil, along with BG Group, is planning to develop two fields classified as ultra-high pressure, high temperature (HPHT) that will qualify for Government support. HPHT fields are costly to develop as they pump oil and gas at extreme temperatures of 166C and pressures of 12,500 pounds per square inch.

“These allowances are further examples of how the UK offers the strongest basis to sustain production from, and investment in, the North Sea,” Andy Samuel, managing director of BG Group’s European upstream business, will say.

Mr Samuel will add that incentives for HPHT drilling unveiled in the Budget “will improve the prospect of the Jackdaw gas discovery being developed".

In Wednesday's Budget, Chancellor George Osborne said new measures to boost drilling companies were necessary as the Office of Budget Responsibility has downgraded its forecast for North Sea oil and gas tax receipts by a further £3bn in 2014/15.

Deloitte estimates that last year saw a 28pc drop in oil and gas exploration and appraisal drilling in the North Sea. Production is now 38pc lower than in 2010 and costs have continued to rise, with oil company operating expenditure reaching a record £8.9bn, according to the consultancy firm.

The central-government funded incentives have raised the economic stakes in the campaign to keep Scotland part of the UK, as an independent Edinburgh would find it hard to fund tax breaks for the oil and gas industry.

"The UK Government can afford to offer this support because of the size and diversity of the UK economy, encouraging vital new investment that creates jobs and growth and helps to ensure we make the most of this valuable resource in the long-term. An independent Scotland would have to invest around £3,800 per head – over 10 times more than when costs are spread across the UK – to match the £20bn the UK Government has committed towards decommissioning in the North Sea," Mr Samuel will say.

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