Exploring Hydrocarbon Depletion
Page added on December 6, 2013
Figures on future UK North Sea oil and gas tax revenues released by the Office of Budget Responsibility (OBR) to coincide with Thursday’s Autumn Statement have been disputed by the Scottish government.
The OBR reduced the forecast it made eight months earlier for North Sea tax revenues in the 2013/2014 fiscal year by approximately GBP 1.7 billion ($2.8 billion) to GBP 5 billion ($8.2 billion), and these revenues are set to fall further to GBP 3.5 billion ($5.7 billion) in 2016/2017 before recovering to GBP 4 billion ($6.6 billion) in 2018/2019.
The figures were seized on by Chancellor George Osborne, who said that the GBP 3.5 billion ($5.7 billion) revenues forecast by the OBR compared to the Scottish government’s GBP 6.8 billion ($11.1 billion) estimate for the period that Scottish Nationalists have been “basing their premises upon and their claims for independence”.
Osborne’s view was backed by the opposition Labour Party’s Shadow Energy Minister. Tom Greatrex said:
“The latest figures from the OBR confirm what reputable commentators have long said – oil revenue from the North Sea will decline significantly and soon.
“Revenues to the [UK] Government from the North Sea are expected to fall by 30 percent between now and 2016/17. This work from the OBR shows that those projections are going down, rather than up.
“The SNP has characteristically and cynically inflated figures for future oil and gas revenues in pursuit of their objective of Scotland separating from the rest of the UK. [First Minister of Scotland] Alex Salmond’s claim that the North Sea would be worth GBP 48 billion to GBP 57 billion [$78.7 billion to $93.5 billion] between now and 2017/18 is another example of the hyperbolic assertion that he tries to pass of as an economic case.”
However, the Scottish government hit back with Scottish Finance Secretary John Swinney saying:
“The OBR oil forecasts are simply not consistent with industry expectations for production or current price trends. For example, despite offsetting the costs of record industry investment the OBR fails to account for the resulting increase in production.
“The Scottish government’s forecasts are based not on the high price projections of DECC or the OECD but on a cautious assumption that prices remain at $113 in cash terms and on the industry’s estimates of production. Scotland has a vibrant oil and gas sector and will continue to do so for many decades to come.”
Trade body Oil & Gas UK also stated late Thursday that it did not agree with the flat-line revenue growth forecast for between 2013 and 2018.
A referendum on Scottish independence is scheduled to take place in the country on September 18, 2014.