British oil revenue forecast cut in blow to Scottish separatists

EDINBURGH, July 10 Thu Jul 10, 2014 11:40am EDT

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EDINBURGH, July 10 (Reuters) - Revenues from Britain's oil over the next 30 years could be around 25 percent less than previously predicted, the UK's independent budget office said on Thursday, delivering a blow to Scotland's campaign for independence.

The Office for Budget Responsibility said in an annual report that since last year predicted combined revenues for the six years from 2013-14 to 2018-19 had been revised down by 8 billion pounds ($13.6 billion).

Expected revenues also for the period 2019-20 to 2040-41 have been cut to 39.3 billion pounds, down 12.6 billion from the OBR's estimate last year.

The vast majority of the UK's offshore oil lies off Scotland, and separatists cite substantial income from North Sea oil as a cornerstone of their plans.

The latest polls show that the campaign supporting independence has lost momentum, however, with concerns over the economy a major issue for voters as they consider whether to end Scotland's 307-year union with England in a referendum on Sept 18.

"Our projections suggest that North Sea oil and gas receipts will remain a valuable fiscal resource for many years to come. But they are highly volatile from year to year," Robert Chote, chairman of the OBR, wrote in a letter to the devolved Scottish Parliament.

"It is clear that the long-term trend in receipts is downward."

In May, the UK and Scottish governments clashed over the fiscal position of an independent Scotland, with differing views over North Sea productivity at the heart of the row.

The Scottish government said the latest estimates by the OBR gave an estimate for future total production that was too low.

"The OBR's forecasts rest on estimates of future production which are well below that used by the industry, by leading experts and by the UK Government," a spokesman for Scottish Energy Minister Fergus Ewing said.

The Scottish government released estimates in May showing it expected nearly 7 billion pounds a year in energy revenue for the next five years.

The OBR said, however, that it expected oil and gas revenue to fall from 6.1 billion pounds in 2012-13 to 3.5 billion pounds in 2018-19 and that its own forecasts had been shown to be over-optimistic in recent years.

A spokesman for the British Treasury said the UK government could support the oil and gas industry if Scotland votes to reject independence but that a separate Scotland would "miss out on the long-term economic potential it has to offer".

($1 = 0.5877 British Pounds) (editing by Jane Baird)

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