SHARES in North Sea oil and gas firms rallied yesterday after the chancellor performed a partial U-turn on his decision to raid their profits.
The Treasury said that it would raise the annual rate of Ring Fence Expenditure Supplement from six to 10 per cent to support firms working in less profitable fields.
The change – which will cost the Treasury around £50m a year – comes after chancellor George Osborne announced a 12 percentage point tax hike on the profits of North Sea oil output in his March Budget, causing uproar in the industry and forcing some companies to reconsider their future in Britain.
The Norwegian energy giant Statoil, which halted $10bn (£6.2bn) worth of projects following the March tax levy said yesterday it would resume preparatory work before making a final investment decision at the end of next year.
“The negative impact has been neutralised and the project is back on track,” a spokesperson for the company told City A.M.
Oil & Gas UK has welcomed the government’s decision to increase the level of tax relief for North Sea oil companies as a “step in the right direction”.
But the Labour party criticised the move. Kerry McCarthy MP, Labour’s shadow Treasury minister, said the government had “acted rashly and then tried to clear up their mess later”.
“George Osborne completely failed to think through his rushed and botched tax raid on the North Sea,” she added.
Shares in Xcite, a North Sea oil explorer, jumped 21.4 per cent, closing at 210p. Shares in Nautical and Enquest also leapt three and nine per cent, closing at 348.50p and 130.6p.