Scotland’s long-term future as a major oil-producing nation and European energy powerhouse was confirmed today with new analysis showing the country is in line for a renewed oil boom in the coming years.
With over half the wholesale value of the nation’s oil reserves estimated to still to be extracted, the Oil and Gas Analytical Bulletin published today highlights four potential scenarios that, taking account of recent trends in investment and prices, could see the industry generate between £41 and £57 billion in tax revenue between 2012-13 and 2017-18.
An average of these scenarios suggests that oil and gas production in Scottish waters could generate approximately £48 billion in tax revenue over the six-year period.
The bulletin, the first in a series of analysis by the Scottish Government, reaffirms Scotland’s position as the EU’s energy capital, showing that on an internationally comparable basis, Scotland is estimated to be the largest producer of hydrocarbons in the EU, accounting in 2010 for nearly two-thirds (64 per cent) of EU oil production.
Among the main points of the bulletin, it shows that:
•The oil and gas sector is a key part of the Scottish economy. It is estimated to contribute around £25 billion to Scottish GDP (onshore and offshore), approximately 17 per cent of the total in 2011. The North Sea oil and gas sector is also a major exporter, boosting the UK balance of payments by £40 billion in 2011.
•Oil and Gas UK – the industry body – estimate that up to 24 billion barrels of oil and gas equivalent could still be recovered. These reserves are estimated by the Scottish Government to have a potential wholesale value of up to £1.5 trillion. This implies that, by wholesale value, more than half of the oil and gas reserves in the UK Continental Shelf (UKCS) could still be extracted.
•The latest Oil and Gas UK Activity Survey reports record levels of North Sea investment. Investment in 2012 was worth £11.4 billion, the highest level for 30 years. Investment is expected to increase to £13 billion in 2013, while total investment in companies’ plans is estimated to now be worth almost £100 billion.
•It is estimated that approximately 85 per cent of remaining UK hydrocarbon reserves lie in Scottish waters. Scotland’s share of estimated oil reserves is thought to be higher still, with in excess of 90 per cent of UK oil reserves believed to be located in Scotland’s share of the UKCS.
Commenting on the bulletin during a visit to Aberdeen Harbour with Finance Secretary John Swinney, where they also met industry leaders from Oil and Gas UK, First Minister Alex Salmond said: “Scotland’s oil and gas sector is going from strength to strength with record levels of investment in the North Sea.
“Projected investment will reach £13 billion in 2013, whilst total investment in companies’ plans is worth around £100 billion. The oil and gas sector is vitally important to Scotland’s economy and this analysis confirms that the industry places Scotland at the heart of Europe, with our remaining oil reserves accounting for almost 60 per cent of EU reserves.
“In fact, Scotland is currently the largest combined oil and gas producer in the EU. And with the enormous potential of offshore wind, wave and tidal in the waters around our coast, an independent Scotland would have the potential to secure our future as Europe’s energy capital and the prosperity that will bring for future generations.”