Industry hails oil revenues 'prize'

North SeaThe oil industry has said there is a "substantial prize still to be won" in the North Sea following new analysis which suggests revenues could be three times higher than official assumptions.

Industry representatives Oil & Gas UK said Scotland's remaining oil "will be difficult and expensive" to extract, but said it is possible with innovation and government backing.

Industry leaders met with First Minister Alex Salmond and Finance Secretary John Swinney in Aberdeen to hear the Scottish Government's predictions of a "second oil boom" on the horizon.

But pro-UK campaign Better Together described the claims as "the SNP's latest oil-themed hilarity", with its constituent parties accusing the SNP administration of "cooking the books" and gambling Scotland's future on a volatile resource.

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 bulletin states: "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.

"Taking into account recent trends in investment and prices, and the methodologies outlined above, suggests that the industry could instead generate between £41 billion and £57 billion in tax revenue over this period.

"Taking the average of these new scenarios suggests that oil and gas production in Scottish waters could generate approximately £48 billion in tax revenue between 2012/13 and 2017/18."

Mr Salmond said: "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."