Question reference: S4W-06988
- Asked by: James Kelly, MSP for Rutherglen, Scottish Labour
- Date lodged: 2 May 2012
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Current status: Answered by Fergus Ewing on 16 May 2012
Question
To ask the Scottish Executive, further to the Minister for Energy, Enterprise and Tourism's evidence to the House of Commons Energy and Climate Change Committee on 17 April 2012 where he stated that the "economic benefits [of North Sea oil and gas] total around £1.5 trillion, although all these figures are dependent upon a large number of calculations that are dependent upon the oil price", what methodology (a) it uses to determine the future cumulative revenue to be accrued from North Sea oil and gas and (b) assumptions it makes regarding the future price of oil.
Answer
The Scottish Government estimates that remaining oil and gas reserves could have a wholesale value of up to £1.5 trillion in 2012 prices. The calculation is based on the following assumptions.
(a) Up to 24 billion recoverable barrels of oil and gas equivalent remain in the North Sea, as estimated by Oil and Gas UK.
(b) Oil prices will average $100 a barrel in real terms from 2012 onwards. By comparison, the Office for Budget Responsibility’s Fiscal Sustainability Report assumes a long term oil price of $107 a barrel in real terms.
(c) A Sterling/Dollar exchange rate of £1/$1.60 is used to derive the Sterling value of remaining reserves. This is the average exchange rate during 2011.