Chancellor George Osborne has unveiled £1-billion rescue package for trouble-hit North Sea oil industry. As part of this, Britain is to cut taxes for North Sea oil producers by £1billion for the next five years. Osborne said supplementary tax charge will be halved, while petroleum revenue tax will be waived for oil companies in North Sea basin. The government will also provide £730 million support for renewable electricity. 

Oil prices fell 70 percent since mid-2014. This has led oil producers to cut jobs in Scotland's oil rich north east region. The oil price drop is impacting revenues for Scotland and Britain. Oil producers in North Sea are also suffering from lower prices. Oil companies in North Sea will also get £730 million support for renewable electricity. 

Reuters reports that supplementary tax charge on oil companies will be reduced from 20 percent to 10 percent. The government will scrap 35 percent petroleum revenue tax as well. Osborne's statement has propelled shares of energy companies. Shares of BP, Royal Dutch Shell and Cairn Energy moved up in the range of two percent and three percent. 

The North Sea is located in Northern Europe and part of Atlantic Ocean. It has England and Scotland in the west, Norway and Denmark in east, Germany, Netherlands, Belgium and France in south. UK and Norway own majority of oil fields in North Sea. 

Osborne said "We need to act now for the long term, backing this key Scottish industry and supporting jobs." Tax cuts are the latest supporting measures by the government. North Sea oil industry is one of the most mature oil basins in the world, having recorded its peak production in 1999. 

Chancellor Osborne has presented his eight budget and spearheaded overhaul of tax regime in the wake of adverse conditions in the oil industry. The Office for Budget Responsibility (OBR) reveals drop in tax receipts to the tune of £10 million this year. Official data further stated that Scotland is £15 billion in red with the deficit twice as equal as UK's, as reported by Express.

Global oil majors operating in North Sea include BP, Royal Dutch Shell and Cairn Energy. The annual budget statement further reveals that oil industry needs government support for reviving their operations. There's been petroleum revenue tax on companies' profits. 

While welcoming tax cuts, Mark Thomas, regional president for BP North Sea, said in a statement "It is important that the tax regime reflects the maturity of the basin as well as the challenging commercial environment."  But, David Blumenthal, senior tax associate at Clyde & Co, said "It may be a case of too little too late. Given the stagnating oil price and fears that we yet to see it fall further before any recovery."

Herald Scotland further adds that the value of Scottish oil and gas firms on London's Alternative Investment Market (AIM) fell 30 percent in 2015. The treasury hopes the cuts would help support the industry to sail through the turbulent conditions. Ministers forecast about 21 billion barrels of oil equivalent left to recover in North Sea region.

According to North Sea industry group Oil and Gas UK, the continuous drop in oil price is forcing oil companies to shut operations. In fact. 21 companies has already  closed their oil fields in 2015 and about 80 more will follow the suit by 2020.