PRODUCTION of oil and gas from the North Sea rose by more than a fifth last year, the largest increase recorded since statistics began in 1999.
But its value slumped by almost a quarter to the lowest total recorded, according to new figures.
Despite the 21.4 per cent increase in production in 2015-16, Scottish Government statistics showed its sales value fell by £4.1 billion to £13.4bn – a drop of more than £10bn from two years ago.
The drop in sales value is due to “sustained low prices” for the commodities, said the Scottish Government, with prices having dropped to below $50 (£37) a barrel, compared to a high point in July 2008 of $147 (£111).
Keith Brown, cabinet secretary for the economy, jobs and fair work, said: “Although this remains a difficult time for the industry and its workforce, it is encouraging to note this increase in production as the industry adapts to the current period of low prices.
“Capital investment on oil and gas fields in Scottish waters was £10.2bn and the approximate sales value of oil and gas produced in Scotland is estimated to be £13.4bn.
“The UK Government retains control of the main economic and tax levers affecting the North Sea oil industry, though the Scottish Government continues to do all that it can to support the industry, including setting up the energy jobs task force that meets today for the 11th time in Aberdeen.
“Our support also includes £24.5 million for increased innovation and business-support measures and the £12m transition training fund, which offers grants to individuals to support their redeployment through retraining or further education.
“We will also maintain pressure on the Treasury to honour promises made in last March’s budget to use the UK Guarantees Scheme for oil and gas infrastructure to help secure new investment in assets of strategic importance.
“The Scottish Government strongly believes that the North Sea oil and gas sector can have a bright future for years to come. This, however, will continue to require a concerted effort from all stakeholders.”
Leading oil economists, professors Alex Russell and Peter Strachan, said the rise in production would be seen by the industry and regulators as a huge success, but “wearing less rose-coloured spectacles” the picture was “starkly different”.
They said: “The value of the oil produced has actually gone down by nearly a quarter from 2014-15 despite the over 20 per cent rise in production.
“Thousands and thousands of direct and indirect jobs have disappeared with every indication that job losses will continue in the future. Rates of pay and working conditions for contractors and drillers have worsened for rig workers. Why is the pain of cost-efficiency decisions not being spread across all stakeholders?
“But more importantly, it is pure delusion to imagine that focusing on increasing production when oil prices are at rock bottom will maximise anything apart from anxiety levels across oil industry employees. Oil will be produced at a loss and oil companies will get handed back taxes paid by them in previous years. The power brokers seem to have lost sight of the bigger economic picture. Yes, even rich Aberdeen has seen increases in users of food banks.
“There has to be a change in direction towards managing the future exploitation of the North Sea’s remaining oil and gas reserves. Decision-making needs to be taken away from vested interest groups.
“By all means consult with all stakeholders but where an industry can be pivotal to the future economic fortune of Scotland then full control over that industry’s activities in Scotland should rest with Holyrood and not Westminster.
“Unless and until that happens our own destiny is being determined not by us but by a London-centric Brexit UK Government.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here