Predicted Slump For North Sea Energy Taxes

Tax revenue from oil and gas is to fall dramatically over the next thirty years, according to official figures.

This year the UK Treasury will benefit from about £11.2bn in taxes raised from oil and gas production, mainly in the North Sea.

But by 2040 that revenue will have slumped to just £2.9bn, due to increased production costs and a fall in the price of oil.

The report, published last week by public finance watchdog the Office for Budget Responsibility, was taken by unionists to be an indication that an independent Scotland would not survive on North Sea oil.


Scottish Secretary Michael Moore said the report showed the "huge long-term consequences of leaving the UK".

But Alex Salmond said his analysis was "scaremongering" and blamed the UK government for creating instability in the North Sea oil industry.

The report stated: "The large swings in prices over the past decade have made UK oil and gas revenues the most volatile of the main tax streams. Higher oil and gas prices than expected would boost profits although, if they were associated with strong cost pressures (as in the mid-2000s), the gain in receipts would be dampened. In contrast, persistently low oil or gas prices would not only reduce profits but also discourage investment and accelerate the decommissioning of fields. In such a scenario, the drop-off in production, and hence receipts, is likely to be steeper than envisaged here."

Mr Salmond has said an independent Scotland would take control of and live off 90% of the North Sea's energy fields.

(NE)