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Warning from oil and gas industry

4 May 10 12:05 GMT

Scotland's oil and gas sector has warned that the north east needs to fight harder to attract more investment in the industry.

The latest Oil and Gas Survey Report said there were signs that capital was being invested elsewhere.

The report from Aberdeen and Grampian Chamber of Commerce said the cost of decommissioning was deterring new entrants to the North Sea.

However overall both producers and contractors reported rising confidence.

Despite recent tax breaks for new fields, the oil industry said it believed more needed to be done to encourage investment.

The report said tax changes were critical to the development of the UK Continental Shelf (UKCS), particularly the area west of Shetland, but also in terms of decommissioning costs, which the report said were deterring new entrants to the North Sea.

Activity in both the UK Continental Shelf and internationally had improved since last year but most companies were still operating well below 2008 levels.

Employment is expected to rise this year but the study suggested difficulties retaining key qualified staff.

Bob Collier, chief executive of Aberdeen and Grampian Chamber of Commerce, said: "The new tax arrangements for a 50% tax band are likely to make the UKCS less attractive to internationally-mobile expert staff."

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