London - AFP
North Sea oil has been at the centre of fierce debate over Scotland's future ahead of an independence vote next month, with both sides wrangling over the outlook for the region's treasure trove of black gold.
Around 42 billion barrels of oil and gas have been extracted from the North Sea since the early 1970s, providing a welcome boost to the British government's coffers -- and Scotland's economy.
Now, with Scotland heading to the polls on September 18 in a referendum that could spell the end of the 300-year-old union with England, its lucrative energy resources are in sharp focus.
British Prime Minister David Cameron's coalition government is calling on Scots to reject independence, while the devolved Scottish administration of First Minister Alex Salmond is backing a historic separation.
Oil revenues have been a key element of the debate, with both sides accusing the other of fudging estimates for the potential of the industry.
Edinburgh has produced several possible scenarios of future oil tax revenues, with the most optimistic predicting an income of £38.7 billion ($64.6 billion, 48 billion euros) over the next five fiscal years.
The British government forecasts revenues will be £17.6 billion.
But amid the political row, most analysts agree that output from the United Kingdom Continental Shelf will fall in the coming years as it becomes more expensive to exploit harder-to-reach reserves.
"The decline (in North Sea reserves) is inevitable, because the bulk of the large fields have been found and the easy-to-produce oil has been produced," said John Howell, professor of petroleum geology at the University of Aberdeen in northeastern Scotland.
Graham Sadler, managing director of the petroleum services group at consultancy Deloitte, added: "It will be a challenge to reverse the decline as it is a mature oil and gas basin."
- 'Unsustainable' trend -
Britain's North Sea oil and gas production has plunged by about 38 percent over the last three years to 1.43 million barrels of oil equivalent per day last year, the lowest level since 1977.
Output is expected to remain stable in 2014, rising to 1.7 million in 2018, according to forecasts from industry body Oil & Gas UK.
Production peaked in 1999 but has fallen sharply since then due to ageing infrastructure, including pipelines and platforms, and the depletion of existing resources.
Some argue that the region could attract more investment in the coming years, citing the draw of beneficial taxation policies alongside high and stable oil prices.
Last year saw a record £14.4 billion invested in North Sea oil projects, and new discoveries and greater efficiency in existing fields are expected to stem the fall in output for now.
But in the long-run, analysts argue Scotland's mature offshore oil and gas fields face an inevitable decline as costs spiral and companies look to other, cheaper areas to explore.
Costs jumped 15.5 percent in 2013 and are expected to rise sharply again this year in what Oil & Gas UK said is an "unsustainable" trend.
"There are a number of projects that may come on stream in the near future to help slow that decline, but we do not see any prospect for a significant growth in production," said Sadler.
"Fundamentally, to sustain production or to alleviate the decline, we need more fields to be discovered. They are likely to be small because we are in a mature basin but we need to be exploring a little more," he added.
Thomas Pugh, commodities specialist at research consultancy Capital Economics, warned that North Sea production was losing importance in the global energy market.
"In the bigger picture, production from the North Sea is going to become less important as production in North America booms" thanks to cheap shale gas reserves, he said.