The Treasury said maximising economic production was important
The Chancellor has announced tax changes which could allow more oil and gas to be extracted from the North Sea.
In the fine detail of the pre-budget report, the Treasury said maximising economic production was important to energy supplies.
It is hoped a series of changes will support investment in the sector and encourage the recovery of an additional 300m barrels of oil and gas.
The move could be important for exploration west of Shetland.
Orkney and Shetland MP Alistair Carmichael welcomed the news and said: "We should remember that the waters west of Shetland could contain up to 20% of the UK's remaining gas reserves.
"Its development will be crucial for the UK's future energy production."