Scotland politics

Nicola Sturgeon: All predictions about oil revenues 'were wrong'

Nicola Sturgeon at FMQs Image copyright PA
Image caption The issue of oil projections came up at first minister's questions

Scottish First Minister Nicola Sturgeon has said everybody who tried to predict the price of oil had got it wrong.

Her comments came after new forecasts wiped £9.6bn off expected North Sea revenues over the next five years.

Ms Sturgeon said the Scottish and UK governments as well as the Office for Budget Responsibility had put prices at between $100-120 a barrel.

Her comments came after big changes to the North Sea tax regime were announced, to support the sector.

The industry was hit after the price of Brent crude oil dipped below $50 a barrel, after having been at about $110 between 2010 until mid-2014.

'Bad news'

During first minister's questions at Holyrood, deputy Scottish Labour leader Kezia Dugdale said the latest oil projections had exposed "dodgy sums" at the heart of the SNP's UK election strategy and plans for "full fiscal autonomy".

The Office for Budget Responsibility (OBR), set up to provide independent analysis, has downgraded its projections for oil receipts in 2016-17 from £2.4bn in December to £600m, with its forecasts for each of the five years to 2019-20 now less than £1bn.

Image copyright PA
Image caption The UK government has announced support for the oil and gas industry

Ms Sturgeon said: "When the Scottish government was projecting an oil price of $110 a barrel, the OBR was projecting an oil price of $100 a barrel and the UK's department of energy and climate change was projecting an oil price of upwards of $120 a barrel.

"So I think it's fair to say, everybody's projections about oil were wrong."

The first minister went on to accuse Labour of being prepared to "gleefully pounce on anything they can describe as bad news".

Wednesday's budget saw Chancellor George Osborne announce Petroleum Revenue Tax (PRT) would be cut from 50% to 35% to support continued production in older fields.

He added that the existing supplementary charge for oil companies would also be cut from 30% to 20%, backdated to January, effectively reversing the hike in the 2011 Budget.

More on this story