Oil Revenues 'Could Drop To £500M'

Scottish North Sea oil revenues could drop to £500 million next year, according to a new report from the Scottish Government.

Depending on the price of oil, production levels and the level of efficiency improvements that can be achieved, tax revenues from the sector are projected to be between £0.5 billion and £2.8 billion in 2016-17 - which the SNP had proposed as the first year of independence if there had been a Yes vote in the referendum.

While the Scottish Government's latest oil and gas bulletin says receipts over the next four years could total up to £10.8 billion, this higher total depends on oil prices returning to 100 US dollars a barrel (£63).

In its worst-case scenario, Scottish North Sea oil revenues could total £2.4 billion over the period 2016-17 to 2019-20.

While leading industry figures have suggested the price of oil could remain at approximately 60 US dollars a barrel (£38) for some time, the Scottish Government said there "is no consensus'' on price.

The report said that, as "an illustrative example, in its March 2015 Economic and Fiscal Outlook the OBR (Office for Budget Responsibility) considers a scenario where the oil price could return to 100 US dollars per barrel in 2015-16''.

It then suggested: "In this case, when combined with the production and operating cost improvements, tax receipts from the Scottish portion of the North Sea between 2016-17 and 2019-20 could be £10.8 billion.''

But Deirdre Michie, the new chief executive of the industry body Oil and Gas UK, has said the North Sea must become sustainable in a world where long-term oil prices are about 60 US dollars a barrel.

Oil tycoon Sir Ian Wood, who carried out a review of the industry for the UK Government, has forecast that the price could stay at about the 65 US dollars (£41) a barrel level ''for possibly quite a long time, maybe two to three years''.

Oil prices reached a peak of more than 130 US dollars (£82) a barrel in July 2008, and were over 100 US dollars a barrel for most of the period, or most of the period from 2011 until the summer of 2014, when they started to fall back.

Prices dipped below 50 US dollars (£31) a barrel in January this year, before starting to increase slowly.

The publication of the bulletin, on the day before Holyrood starts its summer recess, sparked angry calls from Labour.

James Kelly raised the issue at the end of First Minister's Questions, saying: "This bulletin has been asked for for months across the chamber and has now been released in the last day of the session.

"It's got profound implications for the Scottish economy with North Sea oil tax receipts at £40 billions less than the White Paper (on independence).''

But a spokesman for First Minister Nicola Sturgeon branded his comments "utterly pathetic'', insisting the bulletin was published today because it was ready to be published today, it's as simple as that''.

The spokesman said: "It was published a full two hours before First Minister's Questions, a document that runs to no more than 20 pages, plenty of detail in it but no more than 20 pages to digest.

"If Labour and the rest of the opposition can't fully digest a 20-page document in two hours on an issue that is already well rehearsed, then I would question their competence or how seriously they take the issue.''