A business group has claimed that Scotland’s oil and gas revenues could be six times higher than currently being forecast by the UK Government.
N-56 – a business initiative founded by Dan Macdonald, chairman of Macdonald Estates – has waded into the row about an independent Scotland’s energy resources, claiming the Office of Budget Responsibility’s forecasts are “woefully pessimistic”.
The OBR indicates that between 2014 and 2040 oil and gas revenues will amount to £57billion.
In a special report, prepared for N-56 by economics consultancy BiGGAR Economics and energy consultancy Tulloch Energy, the group puts forward a nine-point plan to raise that income to £365billion, regardless of whether the country is independent or not.
Many of the recommendations mirror what has already been put forward by industry veteran Sir Ian Wood in his recent review. They are:
– Government policy and decision-makers responsible for oil and gas taxation and regulation to be moved from London to Aberdeen, whether Scotland is independent or not.
– A more competitive tax regime for the North Sea established through a thorough review of the taxation system.
– The creation of a Hydrocarbon Investment Bank to boost investment in the sector.
– A long-term oil and gas industrial development plan to foster economic growth.
– Revitalising exploration to ensure recoverable oil and gas resources in the UK are fully explored and exploited, including taxation incentives to boost production.
– Ensuring oil operators maximise economic recovery from the fields they hold licences for.
– Developing resources on a regional basis, rather than by individual field, to maximise their value.
– Investing in prolonging the life of the existing infrastructure to process oil and gas resources.
– Exploiting the use of existing technologies to maximise recovery of oil and gas.
Macdonald is a known business supporter of the Yes campaign.
First Minister Alex Salmond said the report fully vindicated the Scottish Government’s health projections for North Sea oil.
“This substantial new report from a leading business organisation blows another huge hole in the credibility of the Office of Budget Responsibility’s oil forecasts, especially as it comes just days after esteemed Scottish economist, Professor Sir Donald Mackay, said the OBR’s calculations were ‘precisely wrong’ and ‘hopelessly at sea’,” he said.
“The report also endorses the Scottish Government’s plans to set up an energy fund – something Westminster have consistently failed to do to the great detriment of current and future generations.”
“As the recent Wood Review proposals earlier this year made clear, we have the opportunity to enhance the economic value of our oil and gas industry by £200billion over the next 20 years.”
The Treasury says “everyone knows tax revenues are volatile and will ultimately decline”
Being part of the UK helps Scotland to smooth the impact of volatile and declining tax revenues, it argues.
“Over the past two years, North Sea tax revenues were around £5billion less than the Scottish Government’s lowest estimate,” said a Treasury spokesman.
“Despite this, the Scottish Government’s plans for independence rely on generating more than double the amount of North Sea tax revenues forecast by the independent OBR.”
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