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Scotland's Oil Revenue Could Be £35 Billion Less Than The SNP Said It Would Be

New figures have shown the oil price is now so low it may cost billions more to extract it than it's possible to raise in tax revenue.

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Tax receipts raised from North Sea oil could be £35 billion less than the SNP said they would be ahead of 2014's independence referendum, according to figures released on Wednesday.

The figures, released alongside George Osborne's Budget statement by the Office of Budget Responsibility, forecast that tax receipts from the UK's oil industry will actually be negative to the tune of billions of pounds between 2016 and 2021.

The new forecast is even more pessimistic than one released by the OBR just last November which predicted that the UK government would raise a small amount in tax receipts from the North Sea between this year and 2021.

The OBR said a further fall in the price of oil, alongside new tax breaks for the industry, has caused it to downgrade its estimate.

The new projection further highlights the gap between the one used by the Scottish government when making its case for independence in 2014, which predicted that the North Sea would raise over £34 billion in tax revenue between 2014 and 2019, and what may actually be raised.

That projection, which was based on the price of a barrel of oil remaining at $110 for the foreseeable future, would have seen a minimum of £5.8 billion being raised in North Sea tax receipts every year until 2019, with an accumulative total of £34.3 billion being raised by the end of the five year period between 2014 and 2019.

This is in stark contrast with the latest projection from the OBR which shows that tax receipts from the North Sea are on course to be around £1 billion in the red each year by the end of the decade.

Those projections start with a £2.2 billion revenue in 2014-15, moving to zero in 2015-16, and going on to lose around £1 billion each period until 2020-21.

The OBR explained in its paper: "With oil and gas prices down on their 2015 levels, we expect a further decline in the profitability of the sector in 2016-17 with many firms making losses.

"Payments of offshore CT and petroleum revenue tax (PRT) will be lower and are likely to be dwarfed by repayments relating to decommissioning costs and the carry back of trading losses."

In response to the crisis in the oil industry, Osborne announced a number of measures in the Budget aimed to help, including reducing the petroleum revenue tax to 0% and halving the supplementary charge – an extra form of corporation tax specifically for the oil industry – from 20% to 10%.

However, the SNP said the measures did not go far enough and represented a "missed opportunity" to help the downturn in the industry which has had a particularly negative effect in the Aberdeen area – the centre of the UK's oil industry.

"I'm pleased the chancellor has caved to SNP pressure and has revised the level of tax for oil and gas companies but he has only cut the total amount of tax from 50% to 40% [across all taxes paid by the industry] while cutting corporation tax for other companies to 17%," said the party's energy spokesperson Callum McCaig.

"This is a missed opportunity and shows the chancellor lacks the vision to bring forward a long-term strategy for the North Sea oil and gas industry and he has failed once again to introduce measures that would encourage exploration."

Jamie Ross is a Scotland reporter for BuzzFeed News and is based in Edinburgh.

Contact Jamie Ross at jamie.ross@buzzfeed.com.

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