by Jo Armstrong and John Maclaren

Key Facts

  • The North Sea oil and gas sector has been a significant contributor to the Scottish and UK economies since the 1970s. It may account for as much as 375,000 UK jobs though these numbers reflect a reduction of around 15% since early 2014.

  • The North Sea's contribution to Scottish GVA was around £15 billion in 2014. However, this is down from £25 billion in 2008 and reflects a number of variables such as production and price.

  • Net tax revenues from the North Sea are now negative (i.e. providers receive more from the Exchequer than they pay into it).

  • Oil and gas production peaked in 1999-2000 and has since fallen by an average of 7-8% a year (although there was a small turnaround in 2015 as a result of new fields opening). Capital investment continued to increase, reaching a peak in 2013-14 - and this is essential to make the most of the reserves and economic potential of the UK Continental Shelf. However, real operating costs rose by 50% between 1999-2000 and 2013-14.

  • In a context of negative trends in production, employment and revenues, it is important to recognise the disproportionate importance of the sector to the North East of Scotland.

  • Oil prices are volatile, are determined by international markets and have historically been a rollercoaster, but one that currently is at or near the bottom of the cycle. Forecast projections remain weak at around $40 a barrel for the next 4-5 years.

  • Up to 22 billion barrels remain to be produced from the UK Continental Shelf, provided economic circumstances, including prices, make it worthwhile.

For the full chapter, please see: Armstrong, J. & Mclaren, J. (2017) The Oil and Gas Sector. In Gibb, K., Maclennan, D., McNulty, K., & Comerford, M. (eds) Scottish Economy - A Living Book. London: Routledge. Available via this link.
 


Visualisations

Figure 8.1: Total Annual Oil and Natural Gas Production in the UK North Sea
- All data comes from the www.gov.scot's publication: Oil and Gas Production Statistics 2015-2016


Figure 8.2: Annual and Cumulative North Sea Capital Expenditure
- All data comes from the Scottish Government's oil and gas statistics


Figure 8.3: Annual North Sea Operating Costs
- All data comes from the Scottish Government's oil and gas statistics


Figure 8.4: Scottish GDP - Including and Excluding North Sea Contributions
- All data comes from the Scottish Government's QNAS tables


Figure 8.5: Total Tax Revenues to UK Exchequer
- Revenue data comes from HMRC, Government Revenues from Oil & Gas Production, while CPI data comes from HMRC's CPI Index for all goods


UK Oil and Gas Production (1975-2017)
- All data comes from the UK Oil & Gas Authority's Historical Production Tables