Oil price slump will wipe out North Sea tax revenues


Oil price slump will wipe out North Sea tax revenues, says the Treasury watchdog

The slump in the oil price could almost wipe out tax revenues from the North Sea, according to the Treasury watchdog.

The Office for Budget Responsibility (OBR) has lowered its forecasts for North Sea tax receipts from £1.5billion to £700m for 2020-21. 

But it said the projections were made a month ago – before the latest crash in the price.

The Office for Budget Responsibility has lowered its forecasts for North Sea tax receipts from £1.5billion to £700m for 2020-21

The OBR warned that the tax take could be £600million lower than previously thought, reducing it to just £100million in 2020-21.

In reality it could be even less as oil has fallen further since this warning was made as the coronavirus outbreak hits global demand.

The sell-off has accelerated as Saudi Arabia launched a price war with Russia. On Monday, oil fell by more than a third towards $30 a barrel. It was close to $70 at the start of 2020.

Even before the latest rout, the OBR had more than halved its forecasts for North Sea tax receipts over the next four years. 

The Budget documents suggest the oilfield will bring in £3.5billion over four years, down from £7.5billion a year ago.