Oil revenues expected to drop by half after global prices fall

Drilling: Oil and gas revenues expected to be half the expected level.

The UK's projected oil and gas revenues for the next 30 years could be significantly lower than expected according to a report from the public finance watchdog.

In its annual fiscal sustainability report, the Office for Budget Responsibility (OBR) projects oil and gas receipts to be 0.05% of GDP by 2040/41 - around half the level it projected in 2011's report.

The OBR said the main driver for this was lower projected global prices for the commodities, describing oil and gas as the "most volatile of the main tax streams".

Scottish Secretary Michael Moore said the lower projections could not be ignored by the Scottish Government and provided further evidence of the long-term consequences of independence.

He said: "The UK Government is doing all it can to help maximise production in the North Sea and create an environment which makes the most of our oil resource.

"The sector is hugely important in Scotland, as are the jobs and skills which depend on it throughout the UK. Our work on field allowances and certainty on decommissioning tax relief is undoubtedly helping.

"But today's report shows the effects of a drop on oil revenues and the Scottish Government cannot ignore the impact of the OBR's halving of its forecast from the North Sea over the next thirty years."

Labour's Shadow Scottish Secretary Margaret Curran said: "The oil and gas sector is very important, but production goes up and down, prices go up and down, and so it is foolish to base our whole economy on this alone.

"It is much more sensible for Scotland to be part of a balanced economic mix rather than being so heavily reliant on just one sector."

A Scottish Government spokeswoman said: "With more than half of the value of the North Sea's oil and gas reserves yet to be extracted, 24 billion barrels with a wholesale value of £1.5tn, oil and gas will remain an enormous economic resource for decades to come."

She said the Government's oil and gas strategy had been developed with the industry to plan out how to help the sector grow.

She added: "With independence the Scottish Government would have the economic levers necessary to provide the long-term stability and fiscal incentives to maximise production, encourage investment and in turn boost tax revenues.

"This is in contrast to the fiscal instability experienced under the UK Government's current system that has been widely criticised by industry."

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