The Scottish government has said that over half the value of oil and gas in the North Sea remains to be extracted, challenging pessimistic estimates from the Office for Budget Responsibility (OBR).
The OBR has predicted that oil and gas revenues will fall from 0.4 per cent of the UK economy to just 0.03 per cent by 2040, generating a tax income of £56bn between 2017/18 and 2040/41 – revised down from earlier estimates of £67bn.
This would be a big blow for the Scottish nationalists who want the country to separate from the United Kingdom, given the oil industry’s major contribution to jobs and the economy. But today’s paper says there are around 24bn barrels of recoverable oil and gas left with a potential wholesale value of up to £1.5tn, and suggests an independent Scotland could produce six times its domestic oil demand and three times its domestic gas demand based on current production.
The report, titled “Maximising the return from Oil & Gas in an independent Scotland”, sets out the Scottish government’s policy for guaranteeing stability in the Scottish oil industry, including a pledge for formal consultation on future changes and more clarity on decommissioning tax relief.
Before its publication, first minister of Scotland Alex Salmond accused Westminster of continuously telling a “fib” and scaremongering to prevent Scots from voting to leave the union on 18 September 2014.
Commenting on the report, Salmond said:
Stability and predictability will underpin the taxation and regulatory regime for oil & gas production in an independent Scotland. This is in contrast to the numerous substantial changes imposed by Westminster on the industry over the past decade, which have damaged both the industry and the Scottish economy.
With more than half the total wholesale value of oil and gas reserves still to be extracted, record levels of field investment, and companies’ future plans worth around £100 billion, the sector in Scotland will continue to thrive for decades to come. With Westminster having squandered the opportunities of the first half, it's up to us to make a better job of the second half.
We will provide optimum conditions for the oil and gas industry to innovate and thrive in a globally-competitive environment. North-east Scotland is already a global hub for the industry, with many companies operating across other sectors such as engineering services, power generation and diversifying into areas such as offshore renewables, with Scottish firms increasingly active in oil and gas regions around the world.
Clearly our world-leading offshore industry can provide long-term benefits to the economy of an independent Scotland. With the ability to tailor policies to national and regional priorities, and by maintaining our close working with the industry, we will ensure this valuable human and natural resource can strengthen Scotland’s economic fortunes and enhance the prosperity of the people of Scotland.
Here's Salmond speaking on BBC Radio Scotland this morning.