UPDATE 2-Britain to cut taxes for North Sea oil producers by $1.4 bln

* Supplementary tax charge cut to 10 pct

* Petroleum revenue tax scrapped

* BP, Shell shares rise, outperform index (Updates with company, analyst comments, share price, details)

By Susanna Twidale

LONDON, March 16 (Reuters) - Britain's finance ministerGeorge Osborne will cut taxes by 1 billion pounds ($1.41billion) over five years for energy companies pumping oil fromthe country's North Sea fields, in a boost for an industrysuffering low crude prices.

"We need to act now for the long term... backing this keyScottish industry and supporting jobs," Osborne said in hisannual budget statement on Wednesday.

The oil price has fallen around 70 percent since mid-2014,prompting producers to slash jobs in Scotland's oil-richnortheast, sapping Scottish public revenues.

Shares in oil companies with fields in the North Seaincluding BP, Royal Dutch Shell and Cairn Energy rose between 2 and 3 percent, outperforming the FTSE100index's 0.7 percent rise.

The tax cuts are the latest in government measures in recentyears to support the North Sea industry, one of the world's mostmature oil basins that has been in steady decline since reachingpeak production in 1999.

Osborne said he would cut a supplementary tax charge on oilcompanies to 10 from 20 percent and scrap the 35 percentpetroleum revenue tax, which had taxed profits for older oil andgas fields.

The tax changes, which will be backdated and effective fromJan. 1 this year, will save the industry around 1 billion poundsin the five financial years from 2016/2017 to 2020-2021.

A spokesman for Shell said the tax cuts were "a step in theright direction".

"It is important that the tax regime reflects the maturityof the basin as well as the challenging commercial environment,"Mark Thomas, regional president for BP North Sea, said in astatement that welcomed the tax cuts.

But David Blumenthal, senior tax associate at Clyde & Co,said it may be a case of too little too late, "given thestagnating oil price and fears that we may yet see it fallfurther before any recovery."

Last month North Sea industry group Oil and Gas UK said theoil price fall had accelerated the permanent shutdown of somefields, with 21 ceasing production in 2015, and as many as 80could follow by the end of 2020.

The chancellor also announced the government would provide atotal of 730 million pounds of support for renewable electricitythrough three contract auctions, with the first auction worth290 million pounds.

A freeze on the country's carbon tax at 18.00 pounds pertonne will also be extended until 2020-2021, while furtherdetails on renewable support and future changes to the carbontax will be announced in the autumn statement, the budgetstatement said.($1 = 0.7100 pounds) (Additional reporting by Sarah Young, Ron Bousso and ElisabethO'Leary, editing by Elaine Hardcastle and Susan Thomas)