THE beleaguered oil and gas industry is set to receive a significant boost today with a £660m investment in the North Sea sector from the Carlyle Group, a US-based global asset management company.
The announcement is being made to coincide with David Cameron's last visit to Washington before the General Election and is the largest deal among a number to be announced, totalling more than £1.1bn, which will create 1700 new jobs across the UK.
It comes as Alistair Carmichael, the Scottish Secretary, signalled the industry would get a major tax break in the Budget, Nicola Sturgeon, the First Minister, announced a taskforce to help save oil jobs and analysts warned some North Sea facilities were now losing money because of falling prices.
In a separate development, Mark Carney, the Governor of the Bank of England, told MPs the oil price slump represented a "negative shock" to Scotland's economy.
One of the main themes of the Prime Minister's trip to the US capital for two days of talks with President Barack Obama is the economic relationship between the two countries underlined by the £1.1bn package of deals, including the Carlyle Group's.
One of the world's largest alternative asset managers, it already has extensive commitments in the UK, and now, one of its newer funds, Carlyle International Energy Partners, is seeking to commit £660m of equity capital into the UK's oil & gas industry in the North Sea. Precise details were not initially made clear.
But welcoming the deal, the Prime Minister said: "The North Sea is one of the UK's most valuable assets and the £660m the Carlyle Group has committed to invest in its oil and gas industry is a clear vote of confidence in the future of the local industry."
He added: "The £1.1 billion of deals announced today will deliver concrete benefits for hard-working families with 1700 new jobs created around the UK stretching from Bristol to the North Sea. This is a clear vote of confidence in the UK and our long-term economic plan which is helping to safeguard our economy for the future."
At Westminster, the Scottish Secretary made clear he was not going to pre-announce Chancellor George Osborne's March economic statement but acknowledged the UK Government would "do what is necessary" to help the industry weather the storm. It wants the Treasury's supplementary charge on company profits scrapped.
Asked if there would be a hefty cut in taxes for the sector in the Budget, Mr Carmichael, who will be in Aberdeen today with Ed Davey, the Energy Secretary, to meet industry representatives, replied: "These are extraordinary times. Government will have to come forward with measures that are suitable for the times."
Edinburgh-based analyst Wood Mackenzie said the UK was among 17 oil exporting countries where some production was "cash negative," or unprofitable, with prices at or below $50 per barrel; half the level of summer.
However, analysts stressed North Sea facilities were unlikely to be shut down as a result because closures would be irreversible and would trigger multi-million pound decommissioning costs.
On a visit to Aberdeen, the First Minister announced the jobs taskforce, saying it was necessary because of the oil price slump, the "mismanagement" of oil and gas fiscal policy by the UK Government, and other challenges facing the industry.
Jackie Baillie, Scottish Labour's finance spokeswoman, described the falling oil price as "the biggest threat to jobs in Scotland since Ravenscraig" and accused the Scottish Government of being silent on the issue.
Earlier in the Commons, Mr Carney, asked about an estimate that the oil price slump would blow a £6bn hole in Scotland's GDP, said: "It is a negative shock to the Scottish economy but it is a negative shock substantially mitigated by the fiscal arrangements in the UK."
Last night, Ruth Davidson, the Scottish Conservative leader, said: "Mark Carney's observation gives weight to the fact, had Scotland voted Yes on September 18, we would be facing up to financial meltdown."
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