UK taxpayers are facing a £24bn bill for decommissioning oil and gas fields in the North Sea threatening to wipe out remaining tax revenues from an industry that has been among the Treasury’s most reliable cash cows for the past four decades.
The new estimates show how the North Sea oil industry risks becoming a net drain on UK resources as it enters its sunset years and raises further questions over the fiscal viability of an independent Scotland.
The projections, based on analysis of the latest industry plans for plugging wells and dismantling platforms and pipelines, is 50 per cent higher than the official Treasury forecast for a public liability of £16bn.
Scottish first minister Nicola Sturgeon said on Sunday she was “not bluffing” about holding a second independence referendum if Theresa May did not keep Britain in the European single market after leaving the EU. However, the prospect of oil revenues being extinguished by decommissioning costs could make it harder to win the case with voters.
Oil companies are forecast to spend £53bn from 2017 winding down North Sea operations and almost half is expected to be recouped from the Treasury through tax relief, according to Wood Mackenzie, the energy research group that conducted the analysis.
