Bulletin predicts oil revenue rise
Filed under: News
North Sea oil revenue could be almost three times higher than the value predicted by the UK's independent fiscal watchdog, according to the Scottish Government.
The Office for Budget Responsibility (OBR) predicts oil tax revenue will drop from £6.7 billion this year to £4.1 billion by 2017/18.
But a best-case scenario, outlined in a Scottish Government analytical bulletin, predicts it could be as high as £11.8 billion - enough to fund a third of the Scottish Government's current annual spend.
The scenario heaps a number of "assumptions" and alternative scenarios on top of the OBR forecast.
These include the assumptions that production will rise in line with industry forecasts and that prices will rise in line with Department of Energy and Climate Change (DECC) forecasts, rather than the OBR's forecasts.
The bulletin states: "Irrespective of the specific assumptions used, Scottish oil and gas production is expected to remain a significant source of tax revenue in future years. Based on the OBR's methodology, production in Scottish waters could generate approximately £31 billion in tax revenue over the six years to 2017-18."
The bulletin follows the release of an internal Scottish Government document, produced a year ago but leaked by the pro-UK Better Together campaign last week, which warned about the volatility of oil.
The leaked paper stated: "This high level of volatility creates considerable uncertainty in projecting forward Scotland's fiscal position. The OBR forecasts set out alongside the UK's March budget have not been seriously challenged by the industry or by independent commentators. Such volatility also means that outturn North Sea receipts can also be higher than forecast."
Commenting on the analytical bulletin, First Minister Alex Salmond said: "This bulletin shows the impact that increases in investment could have on production and revenues, and examines a range of scenarios. It demonstrates that when the expected increase in production to two million barrels a day is taken into account, there can be little doubt that Scotland is moving into a second oil boom.
Labour infrastructure spokesman Richard Baker said: "Last week we found out that in private John Swinney thinks that oil revenues will fall in a separate Scotland, bringing into question the affordability of even the state pension. So, on Alex Salmond's orders, he has spent the weekend cooking the books to come up with an extra £26 billion out of thin air. The SNP really do think that they can treat the people of Scotland like fools."