North Sea oil and gas is set to bring in £1bn for the Treasury thanks to oil price boost

Oil and gas produced in the UK’s North Sea is set to contribute about £1bn in tax this financial year as the industry makes a striking turnaround due to a significant rise in oil prices.

Brent crude oil prices this year recovered to a level not seen since the market tumbled in 2014, reaching as high as $71 a barrel in January.

For the first nine months of the 2017/18 fiscal year, data from HM Revenue & Customs shows North Sea production brought in £814m in tax, and the trade body Oil & Gas UK predicts just over £1bn for the Treasury in the full year, assuming profitability in the last quarter of the year will be similar to the first three quarters.

This would be a huge shift from last year when the industry did not generate any tax revenues.

According to Oil & Gas UK’s website, the industry has paid almost £330bn in production tax since 1970.

The group has said there are up to 20bn barrels of oil and gas still to be recovered from the UK Continental Shelf in the North Sea.

Oil majors have shown increasing commitment to the North Sea in recent months as oil prices climbed.

BP last week announced two new oil and gas discoveries in the North Sea and said it plans to double production in the ageing basin to 200,000 barrels a day by 2020.

Last month, Shell also committed to increased investment in the North Sea with a plan to redevelop its Penguins oil and gas field, which is its first major project in the basin in six years.