The U.K. will introduce an “investment allowance” to try to spur exploration in the North Sea and reverse a decline in output.

The measure announced Dec. 4 by Chief Secretary to the Treasury Danny Alexander is designed to simplify and lower effective taxes for North Sea investors. It follows a cut in the supplementary charge on producers to 30% from 32% and an allowance for HP/HT projects unveiled by Chancellor of the Exchequer George Osborne on Dec. 3.

“The government’s ambition is to reduce the supplementary charge rate further as soon as we can afford this,” Helen Dickinson, a Treasury deputy director, said Dec. 4 in London. “The overall tax burden will need to fall as the basin matures.”

The government will also provide funding for seismic surveys in underexplored areas and consider options to help with infrastructure and dismantling of platforms.

“Many will question whether today’s announcements, and other changes announced in the Autumn statement, will provide enough immediate support and reassurance to the industry at a time when the oil price has fallen rapidly and companies face decisions about where in the world to invest scarce resources,” Roman Webber, head of oil and gas tax at Deloitte LLP, said in an e-mailed note.

Brent, used to price more than half the world’s crude, has slumped more than a third this year while costs of extraction surged 26% last year alone, according to the industry lobby.

Offshore