Oil companies warned that the absence of new tax breaks in the Budget for North Sea operations was likely to cost thousands more jobs this year.
The UK Offshore Operators’ Association said the Chancellor had failed to recognise the depth of the difficulties the industry faced.
UKOOA’s director-general James May said he feared that the missed opportunity would lead to ‘more decline in exploration, development activity and job losses’.
The industry was already braced for tens of thousands of job losses this year the more alarmist reports suggested up to 100,000 could go as depressed oil prices have hit oil company profits and investment plans.
The two largest operators in the UK North Sea, Shell and BP, said in February that the $8bn they would cut from their worldwide capital expenditure budgets this year would have a severe impact on the North Sea.
Last week, energy consultant Wood Mackenzie warned that exploration and appraisal drilling in the UK sector of the North Sea was likely to drop 40-50% this year from 1998 to its lowest level since the late 1970s.
The firm said, however, it was probably too early to expect the Government to provide new fiscal incentives, as their impact was difficult to assess.