Report claims North Sea oil and gas grossly undervalued

Posted on 18 Aug 2014 by Callum Bentley

North Sea oil and gas revenues could be grossly undervalued by the UK economic watchdog, according to a new report.

The new report by self-proclaimed “apolitical business organisaiton”, N-56, values the NorthSea oil and gas sector almost six times higher than currently stated.

N-56 was founded by Dan Macdonald, a member of the advisory board for pro independence campaign organisation, Yes Scotland.

Both the Scottish and UK Governments have been using the future value that could be created form the oil and gas sector as a political football surrounding the Scottish independence vote. Both Governments have claimed that their opposition has either under or overvalued the resource’s potential value. The UK Office for Budget Responsibility (OBR) forecast North Sea revenues in the North Sea to be worth about £61.6bn between 2013/14 and 2040/41.

However N-56 claims the figure could be as high as £365bn, if a series of recommendations were implemented.

Graeme Blackett, from N-56, said: “Since 1970 over £1 trillion in oil and gas revenues have been produced by the North Sea and at least as much value remains to be produced as already has been, presenting a tremendous opportunity for the sector and for Scotland’s public finances.

“Scotland is a net contributor to the UK public finances, in part due to our geographic share of oil and gas revenues, and this ensures that our finances are typically healthier than the UK public finances as whole.

“The OBR puts forward incredibly pessimistic forecasts on both barrel price and reserves, largely discredited by industry experts. “What is clear is these natural resources can be maximised through implementing the recommendations put forward both by ourselves and the Wood Review, delivering considerable surpluses that we would recommend are used to invest in an oil fund to benefit future generations.”