THE North Sea oil and gas industry became a net drain on the UK’s public purse for the first time last year by nearly £400 million, according to new analysis.

Carbon Brief, the energy specialist, said in 2016 the sector received £396m, net of tax payments, from the Treasury compared with a contribution to it of some £381m in the previous year.

As recently as 2011, the industry’s contribution to the national coffers was more than £10 billion.

“The sector is no longer the cash cow Chancellors have come to expect over the past several decades,” said Simon Evans, Carbon Brief’s policy editor.

The oil price, which hit a high of $114 a barrel three years ago, fell to below $30 in 2016 as an over-supply coincided with falling demand as the world economy slowed. The attempt by the Opec oil producers to reduce output has only had limited success.

In November, the Office for Budget Responsibility, the UK Government’s independent forecaster, estimated the loss to the Exchequer from the North Sea at £500m for 2016/17 but in March recalculated it to a £100m benefit for this financial year.

However, over the forecast period to 2021/22, its revenue prediction has gone down from £7.3bn over the next five years to £4.6bn.

In its economic and fiscal outlook last month, the OBR put the recalculation down to an accounting error in the way company-level losses were being carried forward to be set against future profits. This was consequently overstating the extent to which those future profits would be taxed.

“Correcting that error has led to a downward revision to receipts of around £1bn a year from 2017/18 onwards. We expect to be able to use the new model in our next forecast,” it explained.

Carbon Brief noted how, since the Government passed the Continental Shelf Act in 1964, billions of barrels of oil and gas had been extracted from reserves under the North Sea.

Now, it said, some of the largest fields were coming to the end of their life. The rigs, pipelines and other infrastructure built to exploit them had to be safely decommissioned and this would, according to the UK Oil and Gas Authority, cost an estimated £47bn by 2050.

Companies can reclaim tax paid in previous years to cover this spending. Oil prices are still far below recent highs and the government has introduced generous tax breaks, worth £2.3bn, designed to encourage new investment in the North Sea.

The energy specialist said that some studies had speculated that the cost of decommissioning could wipe out all future North Sea tax revenues, “potentially damaging the economic case for Scottish independence”.

It said that fears that there would be a point where the oil and gas industry would be a net drain on the public purse had “already arrived,” saying the loss of £396m had occurred in 2016 and that future revenues looked “uncertain”.

Mr Evans noted: “It’s worth adding that, in total, the sector has contributed in the region of £190bn in tax revenues since the 1960s. Note that this figure has not been adjusted for inflation. After accounting for inflation, estimated revenues are even larger; a Financial Times article puts them at £330bn.”

He added: “North Sea firms received a net tax payment of £24m in the 2015/16 tax year. In the current tax year to date, they received £420m, suggesting the net tax position is getting worse.”

A Treasury spokesman said: “The fall in oil prices has had a significantly adverse impact on tax receipts. This is because many companies are making losses in the current low oil price environment.”

Carbon Brief also said separate analysis of Government figures showed oil giants like BP, ExxonMobil and Shell were the largest recipients of taxpayer funds during 2014 and 2015 with each having received hundreds of millions of pounds to cover the costs of decommissioning old oil and gas fields. During those two years the top five recipients received a net total from the taxpayer of more than £1.1bn.