Oil revenues rebound to net Treasury £6.8bn, forecasts suggest

Oil and gas revenues are expected to rise over the next six years and net the Treasury a total of £6.8bn by 2022, according to forecasts by the independent Office of Budget Responsibility (OBR).

Oil and gas receipts will return a surplus next year, the OBR predicts

Amid historically low production and a crash in the oil price over the past two years, North Sea oil had been expected to be a drain on the public finances, with repayments outstripping revenues.

However, OBR forecasts suggest oil and gas receipts will cost the Treasury just £500m this year, before returning a £900m surplus next year. Revenues are expected to reach £1.5bn in 2018-19, £1.8bn in 2019-20, £1.6bn in 2020-21, and £1.5bn in 2021-22.

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Oil prices have risen by roughly 60% since January, with Brent Crude sitting just below $50 per barrel from a low of less than $29 per barrel at the turn of the year.

The OBR said that investment aimed at boosting production was having a positive effect, and forecast that oil prices would rise gradually to $60 per barrel in 2022.

“We now assume that oil production will be flat until 2019 (rather than until 2018) partly reflecting returns on high levels of capital expenditure over the past few years,” the OBR said.