UK oil estimates “incredibly pessimistic”

The UK Office for Budget Responsibility (OBR) has forecast oil and gas revenues of £57 billion by 2040 - something Scottish investment initiative firm N-56 says is well below accurate industry forecasts.

“The OBR puts forward incredibly pessimistic forecasts on both barrel price and reserves, largely discredited by industry experts,” said Graeme Blackett, director of BiGGAR Economics, who helped prepare the N-56 oil and gas report.

The OBR puts forward incredibly pessimistic forecasts on both barrel price and reserves

Graeme Blackett

According to the N-56 report, if the necessary recommendations are implemented, oil and gas revenues from the North Seas could be more than six times higher than the OBR figure at around £365 billion by 2040.

“What is clear is these natural resources can be maximised through implementing the recommendations put forward both by ourselves and the Wood Review, delivering considerable surpluses that we would recommend are used to invest in an oil fund to benefit future generations,” Blackett said.

Among the N-56 findings, is the potential to establish an oil fund, which N-56 says is present in almost every other oil producing nation bar the UK, and which would ensure fiscal stability.

The report also calls for a more robust tax regime for the North Sea which would be established through a thorough review of the current taxation system, ultimately benefiting Scotland’s economy.

“Since 1970, over £1 trillion in oil and gas revenues have been produced by the North Sea and at least as much value remains to be produced as already has been, presenting a tremendous opportunity for the sector and for Scotland’s public finances,” said Blackett.