Salmond: Oil revenues a 'bonus'

Oil revenues will be a "bonus", but not the basis of the economy in an independent Scotland, the First Minister has said.

Alex Salmond said that while Scotland would reap the benefits of a boom in the industry, it would be less dependent on oil reserves than Norway.

Mr Salmond was speaking ahead of the publication of a Scottish Government paper next week, which will set out the future of the oil and gas industry in an independent Scotland.

The paper will point out that, according to Oil and Gas UK, North Sea production is likely to reach two million barrels a day by 2017 - a 30% increase on current levels.

The paper is the latest in a series to be produced by the Government in the lead-up to the 2014 referendum. It will also highlight that the oil industry has already committed £100 billion to future investment in the North Sea. But the Scottish Government insists that the Scottish economy will not be based on oil.

Mr Salmond said: "It will be a bonus. If oil is taken out of the equation, then Scotland's economic output per head is almost identical to that of the UK. The benefit we get from oil and gas will be a huge bonus."

It is estimated there are 24 billion barrels of oil and gas remaining, with a wholesale value of £1.5 trillion, according to the Government.

The Government has challenged figures produced by the Office for Budget Responsibility (OBR) which recently predicted a downturn in oil and gas production. The OBR said Oil and gas revenues are expected to drop from 0.4% of the UK economy to an almost negligible 0.03% by 2040.

A Treasury spokesman said: "Scotland has a thriving oil industry that plays a key role in the UK economy. The UK is supporting the industry to extract every last drop of oil through decommissioning, tax reliefs and field allowances, which provide a more certain environment in which to invest. But this support costs money and combined with increased costs of production means that tax receipts are set to decline.

"Credible, independent forecasts like the OBR's show that oil revenues are set to decline to £56 billion over the period from 2017-18 to 2040-41. This would leave a significant gap in an independent Scotland's finances. Scotland is better off dealing with a volatile resource like oil as part of the larger UK economy, where it is easier to manage both the fluctuations and the projected decline in revenues."

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