OIL and gas can become a significant contributor to the UK economy once again, industry leaders have insisted, after figures showed the taxpayer made a loss from the North Sea in the first half of the year.
Industry body Oil & Gas UK said producers were working to improve efficiency after the latest official figures showed the North Sea became a net drain on the Treasury in the first six months of the financial year.
It is thought to be the first time North Sea tax receipts have dipped into the red since oil came fully on stream in the mid-1970s.
HM Revenue and Customs collected £248 million in offshore corporation tax and petroleum revenue tax (PRT) from April to September but paid out £287m in rebates, a loss of £39m.
The rebates were the result of producers "carrying back" big losses and off-setting them against PRT paid in previous years, HMRC said.
Deirdre Michie, the chief executive of Oil & Gas UK, said producers faced challenges "on a number of fronts," including the collapse in global prices from over 110 dollars per barrel in the middle of the last year to below 50 dollors per barrel now.
Producers have also been hit by rising costs and expenses linked to a number of major North Sea projects, she added.
She said: "The combined impact of these factors currently results in lower revenues being generated by the industry for HMRC but it’s important to remember that since 1970, the sector has paid over £330 billion in taxes to the UK Government.
"Currently, working alongside government and the Oil and Gas Authority to ensure the appropriate fiscal and regulatory regimes are in place, the industry is tackling its cost base and improving efficiency to maximise economic recovery from the UK Continental Shelf so that it can once again be a significant contributor to the UK economy."
The new HMRC figures, revealed by The Herald on Wednesday, provoked criticism of the SNP's independence White Paper, which was based on an oil price of 113 dollars per barrel.
The blueprint predicted an independent Scotland would receive up to £7.9 billion in North Sea revenues next financial year, 2016/17.
The latest forecast from the independent Office for Budget Responsibility is for the North Sea to generate less than a tenth of that, £600m, next year.
The budget watchdog has predicted revenues of £700m for the current financial year and government officials cautioned against using the April to September period as an indicator of the final out-turn, as corporation tax payments are staggered towards the end of the year.
But John McLaren, an economist and honorary professor at Adam Smith business school at Glasgow university, said: "This may be the first time there has been a negative tax take over a six-month period and means it will be very difficult to attain even that £700m figure, which itself is much revised down from a year ago."
He said the figures reinforced the view the North Sea was "nearing the end" as a source of revenue for the government.
"Really, its future importance is in maintaining economic activity and retaining jobs," he said.
Fergus Ewing, the Scottish Government energy minister, said production was starting to rise.
He added: "While the Scottish Government continues to take action to support the sector, the UK Government has yet to fulfil its commitment to further consultation with the industry during 2015 on options to support exploration, decommissioning and critical infrastructure.
"The Scottish Government has already called on the UK Government to bring forward these consultations – a commitment made almost a year ago – to enable industry to commit to the investment required for this sector to prosper for many decades to come."
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