IT MAY become easier for small players to take over ageing North Sea assets after the Chancellor said it was “essential that we maximise exploitation of remaining reserves”.

In a Budget speech that lasted 55 minutes, the Chancellor devoted just 57 words to the oil and gas industry that supplies about half of the UK’s energy needs.

But Philip Hammond’s announcement that the Treasury would review decommissioning tax relief to support the sale of late-life assets was welcomed by the industry, although the Scottish Government said the measures did not go far enough.

The review will include the establishment of an advisory panel of industry experts, while a formal discussion paper will be published on March 20.

Under current legislation operators can apply for tax relief on the costs of decommissioning a North Sea asset. However, it is believed new entrants to the market without the years of profit generated by the asset in their tax history are unlikely to make an asset profitable for long enough to ensure sufficient relief from decommissioning.

One solution is for the seller of an asset to retain the liability for decommissioning, as was the case when private-equity backed Chrysaor picked up a basket of assets from Shell for $3billion (£2.4bn) in January.

But this carries some risk on the part of the seller, and Derek Leith, head of oil and gas tax at EY, said the Chancellor’s intention “will be to find a way to change the legislation so that if a buyer takes the asset they get the same tax relief as the seller would”.

The advisory panel will try to determine how this is possible, while ensuring there is no cost to the Treasury.

“That must be absolutely fundamental,” said Mr Leith, who hypothesised: “The Treasury was going to pay the seller, but now it’s going to pay the buyer. Meanwhile, the buyer has invested in the asset, run it more efficiently, and for longer, so there is a net benefit of that investment to the country.”

Deirdre Michie, chief executive of industry body Oil & Gas UK, said: “The UK Continental Shelf continues to offer an attractive range of opportunities and it is vital we draw in a diversity of investors to ensure these are realised. Enabling assets to transfer when appropriate to new owners is key to this.”

Derek Mackay, Scottish Government Finance Secretary, said: “We have repeatedly called on the UK Government to take action to support the oil and gas sector. While welcome, today’s announcement on a ‘discussion paper’ is long overdue and is not the urgent action the industry needs.”