A Review of the Nigerian Energy Industry

Scottish oil fund 'would be worth billions'

offshore oil rig18 September 2014, News Wires – A Scottish sovereign wealth fund could produce a recurring oil income worth billions to an independent Scotland, according to a new analysis.

The economic outlook found that if only £1.2 billion ($1.96 billion) was invested each year into an oil fund and delivered similar growth to the Norwegian Fund, then Scotland could expect a fund worth £73.64 billion in 24 years.

Rather than be directed to tax revenues, the fund would continue to grow year on year with revenues from the North Sea and investment returns reinvested, the report argued.

Oilandgaspeople.com chief executive Kevin Forbes said the analysis suggested that Scotland could create ”a never-ending supply of funds derived from North Sea oil and gas” if it were to establish a national oil fund.

“For a only a small annual investment of oil and gas tax revenues each year, Scotland could create for itself an oil fund which provide earnings similar to current oil and gas tax receipts,” he said.

Economists for oilandgaspeople.com estimated Scotland could have amassed a fund worth between £73.64 billion and £147.28 billion during the 24-year lifespan of Norway’s equivalent fund.

In today’s prices the Scottish fund would bring in an annual income of between £2.9 billion and £5.8 billion, or the same amount as current estimated tax receipts from North Sea oil and gas revenues.

Forbes pointed to the success of Norway’s equivalent fund and the fact that ”while the rest of the oil nations of Europe are in deficit, Norway is able to ride out financial instability thanks to its courageous forward planning”.

The analysis based on estimated North Sea tax revenues and on a compound interest rate similar to that of the Norwegian fund, which grew at 5.7% a year over its 24-year lifespan.

The value of the North Sea’s oil resources has been central to the debate leading up to Thursday’s independence referendum, with a number of sharply contrasting views on the future prospects of both the North Sea and an independent Scottish economy in the event of a Yes vote.


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