THE beleaguered North Sea energy sector will recover from its woes under bold £1.3bn Government plans, industry leaders last night confidently predicted.

Chancellor George Osborne yesterday (Wednesday, March 18) announced a raft of changes to bolster oil and gas work.

The industry supports about 65,000 North-East jobs but has toiled amid falling oil prices, forcing companies to pare back workforces.

However, Mr Osborne told Parliament he will cut taxes and increase spending on investigations to development new areas to ease its pain.

The move has been backed by industry bosses, including business development organisation NOF Energy, manufacturers’ organisation, EEF, and the Confederation of British Industry.

BP, ConocoPhillips, Chevron and Shell have all made staff redundant, with trenching firm Reef Subsea UK, based at Thornaby, near Stockton, and Darlington’s DeepOcean UK also shedding posts after being rocked by the troubled environment.

But, speaking about his plans, the Chancellor said he was aware of the offshore sector’s difficulties and confirmed £1.3bn measures, which include cutting Petroleum Revenue Tax from 50 per cent to 35 per cent, to support work in older offshore fields.

He said an existing supplementary charge for oil companies will be trimmed from 30 per cent to 20 per cent, backdated to January, which he said will lift North Sea oil production by as much as 15 per cent by the end of the decade.

The Chancellor added the Government will also spend money on surveys across under-explored areas of the UK Continental Shelf to find potential new developments.

He said: “While the falling oil price is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North Sea.

“It’s clear the fall in the oil price poses a pressing danger to the future of our North Sea industry, unless we take bold and immediate action.”

The oil and gas sector is a major employer in the North-East, with workers’ skills in demand around the world.

It also delivers a boost to local infrastructure, with Durham Tees Valley Airport heavily dependent on offshore employees using its terminal to fly to Aberdeen, recognised by many as the UK’s energy capital.

For those reasons, George Rafferty, chief executive of NOF Energy, which has offices near Durham City, said it was vital Mr Osborne delivers his Budget promises.

He said: “These measures will be welcomed by the oil and gas industry, and will support its role as a key contributor to the economy in terms of energy generation, investment and job creation.

“Providing a more attractive fiscal regime for the sector will help re-establish the competitiveness of the UK oil and gas industry and help stimulate exploration, which is a catalyst for all offshore operations, creating extensive opportunities for companies in the supply chain.”

Liz Mayes, EEF’s North-East region director, added: “It’s clear the fall in oil prices has been a mixed blessing for manufacturing, with firms exposed to delayed or cancelled investments in oil and gas exploration quickly feeling the effects through lost orders.

“The Chancellor’s announcement provides a solid signal that the Government stands behind greater levels of activity in this important sector.”

John Cridland, CBI Director-General, said the Chancellor’s moves would put workers at some ease, but said price worries would continue to stifle the industry.

He added: “The industry supports 450,000 UK jobs and is a major contributor to GDP.

“It has been given a much-needed boost with the reduction to the supplementary charge and other incentives, and this will help address concerns over job losses and investment freezes.

“However, pressures remain due to low oil prices.”