Oil Workers Oseberg Oil Field North Sea
Workers at the Oseberg oil field in the North Sea. Reuters

Chancellor George Osborne pledged to give some much needed support to the struggling oil and gas sector, which has been ravaged by the recent slide in oil prices.

Osborne wheeled out a series of measures for the North Sea oil industry, including a tax allowance and a cut in the tax on petroleum tax revenues from 50% to 35%.

He said the package amounts to £1.3bn in support for this "vital industry". The Office for Budget Responsibility's assessment is that it will boost expected North Sea oil production by 15% by the end of the decade.

Scotland needed support

Not to put too fine a point on it, the Chancellor claimed: "Independent Scotland would never have been able to afford package of support".

"That's one benefit of our 300 year old union. Just as we pool resources we share challenges. We are one United Kingdom," he said, receiving applause from MPs.

The package is a little more than the £1bn predicted by analysts who had said this only netted about £2bn in the last fiscal year, and production will have declined since then.

While oil prices have recovered from a low of $45 per barrel (pb) to around $59 at present, this remains below the $75pb mark.

The Chancellor had promised in 2011 to consider reducing the supplementary charge on oil and gas producers' profits from 32% back down to 20%.

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