The UK government is expecting higher tax receipts from the North Sea oil and gas industry in the years ahead after the recent period of stronger commodity prices boosted forecasts.

Chancellor of the Exchequer Rishi Sunak delivered his annual autumn budget speech to parliament on Wednesday, announcing a £150 billion ($206 billion) increase in spending.

The Treasury said it is expecting receipts from petroleum revenue tax and offshore corporation tax of £900 million in the 2021-2022 tax year; £2.1 billion in 2022-2023; £1.4 billion in 2023-2024; £1.2 billion in 2024-2025; and £1.3 billion in 2025-2026.

In documents published alongside the government's spending plans, the UK’s fiscal watchdog noted the estimates have increased by an average of £1.4 billion per year compared to forecasts published in March.

“This is almost entirely explained by higher oil and gas prices,” the Office for Budget Responsibility (OBR) said.

The government has recently tried to calm the nerves of the country's oil and gas sector, saying there has been no change in its policy on new oil and gas fields after a step-up in protests and legal action by environmental campaigners worried about climate change.

The focus of opposition has been against Siccar Point Energy’s proposed Cambo development in the West of Shetland area.

The UK hosts the United Nations' COP26 climate conference in Glasgow next week.

The OBR forecast for gas prices is based on futures prices over the 10 days to 15 September. Since then gas prices have soared 65.7% while oil prices have risen by 4.7%.

This would add an extra £2.3 billion to receipts in 2022 and 2023, it said.

However, a downward sloping forward curve for gas prices means it is expecting receipts of £1.2 billion by 2026 to 2027.

Oil and gas prices fell last year at the onset of the Covid-19 pandemic but rebounded alongside the recovery in global economic activity.

The OBR said the recent increases in UK gas prices partly reflected “international developments, including low gas reserves in Europe, an inelastic supply of natural gas from Russia, and very high demand in China”.

“There are also several UK-specific factors, such as outages at some nuclear stations, unusually low levels of wind power, and diminished reserves following the closure of the Rough storage facility,” the OBR said.