Oil and gas revenues drop by 55% in a year, figures show

Published: Wednesday 9th March 2016 by The News Editor

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Revenues from North Sea oil and gas fell by more than 50% last year, with Scotland having a higher rate of fiscal deficit than the rest of the UK, new figures have revealed.

The Scottish Government published its latest data on revenue and expenditure, which showed a deficit of £14.9 billion for 2014-15, when a geographic share of North Sea revenues is allocated to Scotland.

That amounts to 9.7% of Scottish GDP – twice the rate for the UK, where the figure is 4.9% of GDP from a deficit of £89 billion.

The publication of the Government Expenditure and Revenue Scotland (GERS) figures showed ” total Scottish revenue fell in cash terms by £607 million in 2014-15″.

It added this “reflects the decline in North Sea revenue, which fell by 55% compared to 2013-14”.

North Sea revenue fell from more than £10.9 billion in 2011-12 to less than £4.8 billion in 2013-14, before dropping to £2.25 billion last year, according to the data.

Scotland Office Minister Andrew Dunlop said: ” These figures show that Scotland is facing challenging economic times, in particular because of the drop in oil price, and demonstrate the value of the broad shoulders of the United Kingdom.”

First Minister Nicola Sturgeon stressed Scotland’s onshore economy is “doing well”, with revenue growth of 3.2%.

She said: ” Taken in the context of the wider economic environment, which has been impacted by muted global demand, falling oil prices and more difficult conditions for manufacturers, the economy has remained resilient with record levels of employment, positive economic growth and growing exports.

“This shows the foundations of Scotland’s economy are strong and that we have a strong base to build our future progress upon.”

She added: “D espite the fact the onshore economy accounts for more than 90% of Scotland’s output, Scotland is clearly not immune to the problems being felt by the oil industry internationally.

“It is important to bear in mind that these are figures from just one year and while we are doing what we can to mitigate these problems, this needs immediate action from the UK Government.”

Deputy First Minister John Swinney urged the UK Government to cut tax in order to make the North Sea more competitive globally.

With Chancellor George Osborne due to unveil his budget on March 16, Mr Swinney said: ” Immediate action is needed to support the industry and make the North Sea more internationally competitive – primarily by a substantial reduction in the headline rate of tax.

” I am also urging the Chancellor to remove fiscal barriers for exploration and enhanced oil recovery, to implement fiscal reforms to improve access to decommissioning tax relief and encourage late life asset transfers, and urgently consider additional non-fiscal support – such as government loan guarantees – to sustain investment in the sector.”

Published: Wednesday 9th March 2016 by The News Editor

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