North Sea oil revenues fell by 75% in the first quarter

<p>Scotland remains EU’s biggest oil producer.</p>

During the first quarter of 2015, North Sea oil revenues dropped by 75 per cent.

According to the Scottish conservatives party, the Scottish government’s quarterly national accounts show that the amount received in tax receipts during the January-to-March period was £168 million. This indicates a significant drop from the £742 million in oil revenues for the last three months of 2014.

The Scottish conservatives said that the figures for Scotland’s share of oil revenues were “burred” in a table in a report. They believe this demonstrates “how wildly wrong” the SNP’s calculations had been before the referendum vote for Scottish independence, adding that it strengthens the case against full fiscal autonomy for Scotland.

However, finance minister John Swinney argued that oil was a bonus, rather than a basis of the Scottish economy.

Collapse of oil prices

Global oil prices have tumbled sharply since June last year, and this has had a big impact on the Scottish oil industry.

In May last year, the Scottish government estimated that oil revenues would be between £15.8 billion and £38.7 billion between 2014/15 and 2018/19.

However, in its latest oil and gas bulletin, published in June this year, the Scottish government said revenues could be as low as £2.4 billion for 2016/17 to 2019/20. In its best-case scenario, with the oil price returning to $100 (£64) per barrel, the government estimated revenues could reach £10 billion.

Murdo Fraser, finance spokesman for the Scottish conservatives, called the drop in oil revenues for the first quarter “incredible”. He acknowledged that the price of oil can be volatile, but that the rate it dropped was surprising.

“Whichever way you look at it, and with the best will in the world, there is just no way an independent Scotland could survive on this,” he added.

Mr Swinney, however, pointed out that Scotland remains the European Union’s biggest producer of oil.

“Recent provisional figures from DECC suggest that May saw some of the most oil and gas produced in the North Sea since March 2012. If this trend is sustained production could increase this year for the first time in 15 years,” he said.

He was also confident that Scotland’s economy was safe.​

“Oil, however, is a bonus, not the basis of Scotland’s economy. Even without it, Scotland’s output per head ranks third of the 12 countries and regions of the UK, behind only London and the South East.”

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.