An expert in Britain's oil and gas industry has said production could fall by an average of 7% a year over the next five years.

Tony Mackay, who runs a consultancy firm in Inverness, said his forecasts of a sharp fall were based on forecasts for each oil and gas field in UK waters, including those under development and possible new fields.

He said the decline in production would have "serious implications" for Scottish and UK economies and disputes over where North Sea oil revenue were controlled from were merely taking attention away from the oncoming production slump.


Any decline would follow 2011's 8% crunch in the production of oil.

Mr Mackay stated: "Continuing high oil prices cannot be guaranteed. Capital and operating costs are rising (in the UK sector) so the operating profit and government revenue per barrel are likely to decline in future."

The price of a barrel of crude oil has been volatile in recent weeks, and Mr Mackay's predictions come on the back of an Office of Budget Responsibility estimate which said UK oil and gas revenue could be half what official advisers had projected last year.

Mr Mackay said: "Both the UK and Scottish governments should give serious consideration to the implications of the continuing decline in production. I believe that the arguments about the control of future oil revenues have become a distractions from sensible discussion about how to slow down that decline."

(NE)