THE North Sea oil and gas sector “has turned a corner and is on the path to recovery”, Nicola Sturgeon said following the first increase in oil revenues in five years.

North Sea revenue grew from £56m in 2015/16 to £208m in 2016/17, the first time that receipts have increased since 2011/12, the latest Government Expenditure and Revenue Scotland (GERS) report reveals.

The rising oil revenues played a major part in reducing Scotland’s deficit to 8.3 per cent of GDP, down from 9.3 percent in 2015-16.

Speaking at a GERS briefing in Edinburgh, Ms Sturgeon said: “We have an accumulation of evidence at the moment which shows that Scotland is in a stronger path to recovery.

“A not insignificant part of that is the recovery that we are seeing in the oil and gas sector.

“It is the first increase in oil revenues since 2011, which again underlines some of the other data that we are seeing from the North Sea that suggests that the sector has turned a corner and is on the path to recovery, while it still has challenges ahead of it.”

She said the sector was adjusting to the “new normal” of low oil prices and lower investment.

“Over the last few years the sector has taken decisions - sometimes very painful decisions, particularly for people that work in the oil and gas sector - that has made production in the North Sea more efficient than it was.

“So you have got a sector that has got the potential to be profitable and a lower oil price for longer than was the case a few years ago.

“Obviously, future exploration is hugely important for future production so giving greater support for exploration is one of the things that we continue to try to persuade the UK Government to do.

“They have taken action over the last few years in terms of some of the fiscal changes around the investment allowance and the supplementary charge in the North Sea, and one of the areas where we don’t think we have done enough is around support for exploration.”

Mike Tholen of Oil & Gas UK said the GERS figures reflected the “profound impact of the drop in oil price on the industry” but also recent improvements in production.

He said: “The sector has already made significant progress in becoming more efficient and is much better positioned to compete for global capital.

“It is crucial that the Scottish and the UK Governments continue to support the industry’s efforts to attract much needed investment into the basin.”

The First Minister was careful to avoid overstating the impact of the rise, which followed a sharp drop from £1.4bn in 2015/16.

Unionist parties pointed out the Scottish Government predicted oil revenues of between £6.8bn and £7.9bn in 2016/17 in its White Paper on independence.

Conservative finance spokesman Murdo Fraser said: “These figures confirm that her independence day - set for March 2016 - would have been our insolvency day.”

Scottish Labour leader Kezia Dugdale said: “Nicola Sturgeon knew the sums didn’t add up. But she offered false hope, especially to the poorest people in Scotland.”

Scottish LibDem leader Willie Rennie said: "Oil revenues have tanked since 2014. The SNP relied on the 2014 numbers for their independence campaign. People need to know why they got it so wrong.”

But Ms Sturgeon insisted the figures “were reliable…at the time” and that past oil revenues demonstrated “Scotland has paid its way” in the UK over the lifetime of the North Sea.

Scottish Green MSP Patrick Harvie called for an end to “tiresome war of words” over oil revenues that follow every annual GERS report.

"What these figures really show is that Scotland needs to build a clean economy that does not rely on oil and gas,” he said.

Former Treasury economist John McLaren dismissed the rise in oil revenues as “trivial”.

“The chances of a revival in oil revenues are slim,” he said on his Scottish Trends blog.

“While production levels have grown of late, North Sea output remains only a third of the level seen in 1999 and the recent upturn is expected to be short-lived.”

He added: “The recent upturn in the North Sea’s fortunes continues to help the Scottish economy grow in cash terms.

“However, the effective demise of North Sea revenues in recent years means that the latest edition of GERS highlights again the underlying difference between the Scottish and UK’s fiscal balances.

“Scotland’s is notably worse, by an amount roughly equivalent to £1,750 per person.”