Norwegian oil company, Statoil, said it would freeze developments in its Mariner and Bressay fields located at the south-east of the Shetland islands, in the North Sea. Both fields are estimated to harbour close to 640 million barrels of crude oil.
Statoil's decisions came as a reaction to the planned £2bn windfall tax Chancellor George Osborne revealed during his last budget announcement, last week. Company spokesman, Bard Glad Pedersen, argued this tax would have a "substantial impact" on the firm's projects in the North Sea, adding that the company would have to "pause and reflect" in order to "consider how to proceed after this". The Norwegian company due to start drilling the Mariner and Bressay fields in by 2017.
Meanwhile, other major players in the North Sea spoke out against George Osborne's plan. Malcolm Webb, chief executive of Oil and Gas UK - the industry's representation body -, stated that thousands of jobs were at risk in the North Sea. The new tax has "damaged investors' confidence in the UK as a stable destination for their capital", he added.
George Osborne, however, defend his fiscal project, deeming it "perfectly reasonable" and insisting that no investment project had been cancelled as of yet.
Nonetheless, the Coalition government could suffer from this controversy as reports appeared that Scottish Liberal Democrat MPs wanted to oppose the Chancellor's tax. This is intended to protect the party's local branches from a voters backlash, as elections for the Scottish Parliament are to take place on May 5. Lib Dems are currently suffering attacks attacks from both Labour and the Scottish National Party (SNP), particularly around Aberdeen, the capital of the North Sea oil industry.
Stewart Hosie, the SNP's Treasury spokesperson at Westminster, spoke yesterday, arguing the new tax was "totally ill-thought". He asked George Osborne to "reconsider his plan before it endangers Scottish Jobs further".