Oil & Gas Revenue 2018 - The UK vs Norway
When it comes to the question of Scottish Independence, the oil & gas industry has played a controversial & hotly contested role.
As a matter of personal curiosity I recently spent a little time researching some relatively easy to obtain facts & figures pertaining to income & production of North Sea oil. I was surprised by what I discovered, and most people I have shared this information with have been somewhat taken aback too.
Now, the first caveat is that there are obvious environmental & ethical factors which apply here. Many object to the use of fossil fuels on the rather reasonable grounds that we are experiencing a level of global warming which threatens future generations. It is my personal belief that an independent Scotland should seek to use any initial windfall from the oil & gas industry and reinvest this money into the research & development of renewable energy, for which we have an abundance of resources to harness. Regardless, fossil fuels are part of our reality at present, and the industry shows no signs of being replaced in the immediate to short term. Putting aside any green credentials or any qualms we might have about oil & gas extraction, I’m here to examine the reality of the existing industry at the present time.
The second caveat is that I am using overall UK production & revenue figures here as an equivalence to Scottish figures. While this is not entirely true, as some of the oil & gas extracted in the UK is located outside of Scottish land/waters, the vast majority is located in the Scottish section of the North Sea.
The third caveat is that I am using Norway by way of comparison here. This is a good comparison for a large number of reasons - similar population size, geography, politics. It is also a poor comparison for a couple of reasons. Firstly, Norway is not a full EU member, and secondly, oil is largely nationalised in Norway. There is an argument that these two facts are related.
Stepping away from all these caveats, this is an important industry, a useful comparison, and reveals some very relevant & perhaps surprising information.
So now for the numbers. In 2018 UK Oil & Gas production increased by more than 4% to 1.7 million boe average per day. Norway, in the same period, produced just over 1.8 million boe average per day. We can see that Norway’s production is slightly larger in volume than that of the UK at present, but we are certainly in the same ballpark.
When we examine the figures relating to revenue flowing in to our respective government’s, however, the accounts show far greater disparity. The UK took in £1.1 billion to the public coffers from oil & gas related taxes in 2018/19 according to the Office for Budget Responsibility. By way of comparison Norway generated 273.5 billion NOK in 2018 & this is predicted to swell to 291.9 billion NOK, or £26.5 billion, in 2019.
As we can see the system as it stands is not working to the benefit of Scotland, or even the taxpayers of the UK. For a similar amount of production Norway is producing revenue for public services 24 times greater than that of the Westminster government. This is before we even get into the fact that the newest platform in the North Sea, the Mariner, is actually owned by Equinor, the Norwegian publicly owned oil company. We now have a similar situation to the UK’s rail services, whereby the publicly owned infrastructure companies of nearby countries are creating profit in the UK to subsidise public services back home. It isn’t exactly a bold statement to call this out as gross mismanagement of our resources.
None of which is to say that an independent Scotland should instantly adopt the Norwegian model. Merely it is an example to illustrate this; that those who suggest Scotland is incapable of standing on its own two feet and run its own affairs are guilty of a quite monumental lack of imagination. There are a plethora of imaginative & innovative ways in which an independent state could choose to run its own affairs. In order to have the opportunity to do so we need to take the plunge & engage in a little more imagination - and self belief.