North Sea oil production drops by more than 45%

Annabel Goldie claims drop in North Sea oil production weakens the argument for independence

NEW figures show that North Sea oil and gas production is falling at a faster rate than anywhere else in the developed world.

Data compiled by the International Energy Agency (IEA) shows that fewer than 65million metric tons were extracted last year from UK waters.

That represents a drop of more than 45 percent in a decade.

The figures are likely to be seized on by the unionist parties to claim in a referendum campaign that an independent Scotland would struggle financially.

The production figures are at their lowest level since the 1970s and less than half those in the peak years of the late 1990s.

Most other oil and gas-producing countries in the organisation for Economic Cooperation and Development (OECD), which represents the world’s advanced economies, recorded a rise in production between 2001 and 2010.

Of those that did report a fall, including Norway, Mexico and Australia, none was as steep as Britain’s.

The newly released figures were gathered before Chancellor George Osborne launched a tax grab on the industry, which business leaders claim will make the problem worse.

However, Annabel Goldie, leader of the Scottish Conservatives, said: “This data is a hammer blow to SNP claims that Scotland would be better off separating from Britain.

“Basing your economic policy on a volatile and dwindling asset is economic madness.”

One of the core strands of the SNP’s argument for independence is that Scotland could pay its way if it were given access to revenue generated by North Sea oil reserves.

But Labour’s Lewis Macdonald, shadow Cabinet Secretary for Infrastructure and Capital Investment, said these latest figures show “the folly of the SNP pinning Scotland’s economic future to a declining resource which has a very volatile price structure.”.

He added: “We all know oil and gas production in the North Sea has passed its peak but there are still enough reserves to maintain thousands of jobs in Scotland for many years to come.

“The real threat to Scotland’s oil industry comes from the SNP whose plans for a referendum on independence will cause uncertainty.”

The IEA, which is charged with assessing future energy supplies by OECD countries, also revealed the UK imported a record amount of oil and gas last year.

The news is likely to alarm thousands of families who depend on offshore jobs.

One a more positive note world-renowned oil and gas industry authority, Professor Alex Kemp, last week published a report which said there is still potential in the North Sea.

But he warned greater tax incentives would be needed to maintain and increase production over the next 30 years.

He said: “Our study showed production from the UK Continental Shelf could continue for a long time and with incentives the decline in oil production, although not gas, could be reversed in some years.”

Billions of barrels of oil have been pumped from the North Sea since 1975 and some experts believe up to 30 billion barrels could still be recovered.

A spokesman for Oil and Gas UK, the industry association, blamed falling reservoir levels, ageing infrastructure and an unstable tax regime for the collapse in production.

Finance Secretary John Swinney described claims the figures undermine the case for independence as “nonsense”.

He said: “In 2009-10 when North Sea revenues fell to £6.5billion, Scotland still contributed far more to the UK than our share of the population.

“Our North Sea oil and gas resources – a trillion pound asset base – are set to generate an all-time record £13.4billion in tax revenue this financial year.

“The Scottish Parliament needs new powers over North Sea oil and gas taxation to allow us to encourage exploration and prolong development, in contrast to the UK Government which is imposing damaging tax hikes across the industry.”