THE TREASURY has been urged to release tax refunds for decommissioning oil rigs to help save jobs in the North Sea.

The SNP has called for the Chancellor to release a portion of the £12.9billion it has set aside for decommissioning tax relief as the oil and gas sector continues to struggle during the pandemic.

HMRC said earlier it would repay operators in taxes they previously spent due to decommissioning older rigs, however MP Stephen Flynn has urged the funds to be released now to enable longer-term projects, such as decommissioning well campaigns, to begin next year.

The MP for Aberdeen South has called for the government to work with not for profit organisation Decom North Sea to develop a way of releasing the cash now, warning of hundreds of job losses if it does not.

Mr Flynn said: “At a time when jobs and livelihoods are on the line, it is simply not acceptable for the UK Government to sit back and do nothing.

“By releasing a fraction of the £12.9 billion it holds against decommissioning tax rebates, with the stroke of a pen the Treasury could save hundreds of jobs in Aberdeen and the North East.

“This is money that they will have to spend in the years to come and it begs the question if now is not the right time to use it, then when is?”

The MP added that the sector is facing a “perfect storm” due to plummeting oil prices and the coronavirus pandemic.

Mr Flynn explained: “The perfect storm of coronavirus and the oil price crash has put livelihoods and the very future of the industry on the line – the stakes could not be higher and the Chancellor simply cannot continue to sit on his hands.

“Just this week Maureen Watt MSP and I met with the team at Decom North Sea to discuss their very realistic proposals to free up some of this near £13 billion fund and I’ll be writing to the Chancellor on the matter too – after all, these are revenues raised in Scotland and should be brought forward to support the sector and jobs now.”

Previously industry leaders warned up to 30,000 jobs could be lost in the North Sea due to the crisis.

Dierdre Michie, Oil and Gas UK chief executive, told the Scottish Affairs Committee in July that a sector deal was needed and more than 7500 jobs had gone already.

She explained: “We have been hit by what we’re calling the triple whammy of Covid, the dramatic drop in the oil price and the low, low gas prices.

“It happened overnight and it happened in a global context.

“We’re a big international industry but we’re a very small community. Certainly in the north east of Scotland we are feeling the impact.

“As a result of Covid, we saw industry having to respond in reducing activity levels by about 40%, we saw projects being pushed back and jobs being lost as a result.”

Aberdeenshire councils head of economic development told a council committee this week that the unemployment rates in the oil and gas industry were getting ready to fall off a “cliff edge”.

Belinda Miller told colleagues on the authority’s sustainability committee: “We all know we don’t really know the scale of the challenge yet from an employment point of view, let alone company survivability through post-Covid scenarios.

“We cannot assume it’s going to be an easy journey for any of us in public sector as we support people who potentially will become unemployed.

“The scale of potential unemployment in the region is significant. If there was a 10% unemployment rate, that’s 26,000 jobs in the city and shire.

“Already data shows a large number of people have been made unemployed from oil and gas sector – and we know the October cliff edge will be quite significant.”

A Government spokeswoman said: “We are dedicated to supporting the oil and gas sector, which supports 270,000 jobs in the UK, and we continue to engage regularly with the industry.

“We also remain committed to a transformative sector deal to help the industry continue to prosper and become more sustainable, as the UK makes strides towards our net zero carbon emissions targets.”