David Cameron and Alex Salmond clash over oil industry

  • 13 October 2011
  • From the section Scotland
David Cameron
Image caption David Cameron said Aberdeen was still at the forefront of the oil and gas industry

David Cameron and Alex Salmond have clashed over the future of Scotland's oil and gas industry, amid claims the sector is being mistreated.

Visiting Aberdeen, the prime minister said he wanted the city to continue to as a centre for global investment for decades to come.

But the Scottish first minister said the Treasury's £2bn industry tax hike had dented confidence in the industry.

The row came after BP got the go ahead for a £4.5bn project off Shetland.

The scheme is an extension of the existing Clair oil field, and will also include investment by fellow oil firms Shell, ConocoPhillips and Chevron.

The prime minister said the investment was a massive boost for jobs and growth.

He added: "Aberdeen has been a destination for global investment for many years and I want to see that continue for decades to come.

"It continues to be at the forefront of new technology, new investment and world-class skills and expertise and shows a real can-do energy and drive to stay ahead and break new ground.

"There is still massive opportunity in the North Sea and I am determined to work closely with the industry here in Aberdeen to maximise this and do what we can to promote further investment and exploration."

Budget 'blow'

Mr Salmond welcomed the BP announcement, but again hit out at the UK government's earlier decision to raise the supplementary tax on North Sea oil production from 20% to 32%, worth £2bn, to fund the cut in fuel duty.

The first minister complained that he had yet to get a response from the Treasury on his proposals for a more "progressive" North Sea tax regime, including a minimum rate of return on company investment before charges are levied.

"With up to 40% of oil and gas reserves still to be extracted, and well over half of the revenues still to be generated, the UK government needs to give more certainty to the industry and restore confidence that has been badly dented by the Treasury's conduct this year," Mr Salmond said.

"As today's announcement demonstrates, there is plenty of life left in the industry.

"Indeed, if it had not been for the budget blow, it would be at the centre of an unprecedented boom in jobs and investment, not just in the west coast frontier area but in the marginal and brownfield places hardest hit by the tax hike."

The Treasury said it did not expect the tax change to have a significant effect on production and investment, as profits were expected to remain high because of oil prices.

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