London, UK | – The Chancellor of the Exchequer George Osborne’s recent tax reform of the UK oil industry has failed to stop Royal Dutch Shell from doubling its planned job cuts at its North Sea operations.
As part of a worldwide plan to manage costs, Shell UK will reduce the number of staff and agency contractors who support its UK North Sea operations by “at least 250” in 2015 on top of the 250 job losses announced last August.
The company on Thursday morning told staff and agency contractors based in Aberdeen and on installations in the North Sea about the changes, which will also include changes to UK North Sea offshore shift patterns.
Paul Goodfellow, Shell’s upstream vice president for the UK and Ireland, said: “The North Sea has been a challenging operating environment for some time. Reforms to the fiscal regime announced in the budget are a step in the right direction, but the industry must redouble its efforts to tackle costs and improve profitability if the North Sea is to continue to attract investment.”
“Current market conditions make it even more important that we ensure our business is competitive. Changes are vital if it is to be sustainable.”
The Chancellor’s pre-election Budget on 18 March revealed new tax and investment allowances to stimulate the North Sea oil and gas industry amid a sharp slump in prices since last autumn.
This was the country’s first comprehensive overhaul of hydrocarbon taxation since 1993, with the petroleum revenue tax (PRT) slashed from 50% to 35% to try and support investment in older fields.
A cut to the supplementary charge from 30% to 20% and backdated to January was also announced, following an earlier reduction from 32% to 30% announced in Osborne’s Autumn Statement last December.
The Chancellor said with the tax cuts and a new investment allowance to stimulate investment, he expected over £4bn of additional investment and at least 120m barrels of extra oil equivalent in the next five years.