Hopes of a new boom in the North Sea oil and gas industry in coming years could be dashed after official forecasts for the sector were slashed.
The Office for Budget Responsibility again downgraded projections for the industry yesterday, with the Treasury now expected to get £700million less in the next six years than forecast in December.
The figures also predict a fall of more than 40% in oil and gas revenues this year, compared with last year.
It triggered a fresh row over Scottish independence, with the £33.2billion total revenue forecast for the next six years significantly below the £41.5billion suggested by the SNP.
But the UK’s leading oil economist branded the OBR’s figures “pessimistic” last night. The official forecasts have been downgraded because of tax relief on multibillion-pound new investments in the North Sea, which were extended in last year’s Budget, along with production drops caused by unplanned stoppages, such as gas leaks, and declining oil prices.
Prof Alex Kemp, chair in political economy at Aberdeen University, told the P&J that if the projections materialised the anticipated boom in the offshore sector over the coming years would not happen.
“The projection for oil production is rather pessimistic. It’s in effect saying that the predicted upturn – which Oil and Gas UK have very recently published in their activity survey – is not really going to take place.
“The assessments of the oil and gas prices are also a little on the low side.
“With these two sets of assessments, the end result is oil and gas revenues are relatively low compared to recent years.”
Scottish Secretary Michael Moore said: “There is a gulf between those independent OBR figures and the hugely optimistic numbers published by the Scottish Government last week.
“The contrast here is between independent OBR figures and an exercise in wishful thinking – with no working attached – from the Scottish Government.”
Finance Secretary John Swinney appeared to agree with Prof Kemp.
“The central point is we’re following industry expectations and advice. That is the most robust measure.”
Recommended for you
