Scotland’s remaining oil and gas reserves are worth a fraction of the £1.5 trillion claimed by the Scottish Government, according to a report by the UK Treasury published yesterday.
Alex Salmond has claimed previously that this would be worth £300,000 for “every man, woman and child” in Scotland. But the First Minister was yesterday facing claims that he had exaggerated the true value, which is just a 12th of this.
The SNP government stood by the figures as a “wholesale value” for Scotland’s oil and gas riches and insisted these would be a key source of tax revenue for years to come.
However, the Treasury paper claims the figure ignores the costs – estimated to be at least £1tn – of extracting reserves and the weaker gas price compared with oil.
The UK government paper, entitled Scotland Analysis: Macroeconomic and Fiscal Performance, also says the SNP figure is not calculated in “net present value”, and claims that a truer estimate of the value is £120 billion.
The claim came as Chancellor George Osborne met oil and gas leaders in Aberdeen to acknowledge the vital role the industry plays in the UK economy.
He warned that the SNP’s plans to create a Norwegian-style oil fund post-independence would result in large cuts to public services.
The Conservative minister said the fund would take £8bn out of the budget to divert revenue into a fund.
“By our calculation, you’d have to make some very substantial cuts – £8bn of cuts – to Scottish public spending,” he said. “The alternative would be tax rises of 18 per cent.”
Since 1990, Norway has invested profits from its oil industry into coffers for the nation’s future. The fund now stands at about $720bn (£475bn) – 40 per cent bigger than the value of the entire Norwegian economy – making it the world’s largest sovereign wealth fund.
Scotland can “go it alone”, according to Mr Osborne, but as part of the UK it has a broader base to “absorb” fluctuations in the revenue.
The SNP administration has placed its revenue from oil and gas at the heart of its plans for independence, but claims that it would be worth £1.5tn for all Scots have proven highly contentious.
The £120bn value, provided by the Office for National Statistics (ONS), is an “independent, alternative” approach, according to the Treasury paper.
“The ONS method is based on the United Nations’ system of economic and environmental accounts, consistent with the system of national accounts,” it adds.
The paper says that only taxes raised from the profits of North Sea oil and gas would flow into the country’s public coffers.
But Scottish finance secretary John Swinney said the paper showed that Scotland had paid more in taxes over the past 30 years than the UK as a whole.
“There is no doubt that Scotland can not only afford to be an independent country, but has the means to thrive as an independent country,” he said.
“Scotland is a key trading partner with the rest of the UK and will continue to be so after independence.”
Mr Swinney added: “North Sea oil will be a bonus, with up to 24 billion recoverable barrels and with a potential wholesale value of £1.5tn, more than half of the resources in the North Sea by value, still to be extracted, according to industry and UK government estimates.
“With up to 24 billion barrels remaining in the North Sea, it is clear that they will remain an important source of tax revenue – and Scotland will have opportunities to invest in an oil fund – for decades to come.”
Drive to attract more women to work in North Sea industries
A major drive to attract more female recruits to the oil and gas industry was yesterday launched at Offshore Europe.
Top-level female executives from the North Sea sector were joined by Scottish energy minister Fergus Ewing for the start of the jobs push.
They took part in a debate on ways to encourage more women to study science, technology and maths and on making the oil industry more appealing to female workers. The UK has Europe’s lowest proportion of female engineers.
The Princess Royal, Patron of Women in Science and Engineering, met women who are already working in the North Sea when she visited the Offshore Europe event in Aberdeen.
Oonagh Werngren, operations director at Oil and Gas UK, said: “Building the number of women studying science, technology, engineering and maths subjects will help companies benefit from the broader talent pool and diverse perspectives that female participation can bring.
“An event such as this highlights the advantages to be gained from both embracing diversity in the workplace.”
Mr Ewing said: “Supporting women to fulfil their potential in the labour market is a key Scottish Government aim.”