Scottish Government Sees $72 Billion of Oil Revenue by 2018

Scotland is in line for an estimated 48 billion pounds ($72 billion) of tax revenue from the oil industry over the next six years, according to the government in Edinburgh as it campaigns for independence.

North Sea investment was worth 11.4 billion pounds in 2012, the most in 30 years, and is forecast to rise to 13 billion pounds this year, the government said in an e-mailed statement.

“It’s clear that Scottish oil and gas could generate more revenues than has previously been assumed,” Scottish First Minister Alex Salmond said in the statement.

Keeping about 90 percent of the U.K.’s oil and gas revenue, calculated geographically, is at the heart of the governing Scottish National Party’s flagship policy of independence from the rest of the U.K. A referendum is due to be held in the fall of 2014, with polls showing voters are about two-to-one in favor of keeping the status quo.

The revenue estimates are higher than those made by the U.K.’s Office for Budget Responsibility in December, when it reduced its forecast because of lower than expected oil and gas prices. By 2017, the office expects the price of a barrel of oil to fall to $92. It cut its revenue prediction for the years 2012-2013 to 2016-2017 by 23 percent to 29.5 billion pounds.

Mixed Forecasts

Over the same period, the Scottish government predicted revenue of 38.8 billion pounds based on what it called a “cautious estimate” of $113 per barrel and higher production. The Norwegian central bank valued future oil revenues at between $80 and $100 per barrel in its October forecast.

The Scottish government should not have been as optimistic in its projections, former U.K. Chancellor of the Exchequer Alistair Darling said in an e-mailed statement.

“What is most alarming about today’s announcement by the nationalists is that they have traded the long-term future of our country for some short-term political headlines,” said Darling, who heads the “Better Together” campaign to keep Scotland in the U.K. “The gamble is just too risky.”

To contact the reporters on this story: Tim Farrand in Edinburgh at tfarrand@bloomberg.net; Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net

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