The North Sea oil and gas industry will deliver about £1 billion in tax to the UK Treasury this financial year, according to latest estimates.

That would be a major turnaround from the previous year, when North Sea oil and gas failed to generate any revenues at all for the UK’s coffers.

New projections from trade body Oil & Gas UK show the industry is on course to deliver about £1 billion for the fiscal year 2017-18.

“We’ve seen an uptick in production and an increase in the oil price,” Adam Davey, market intelligence manager at Oil & Gas UK, told the Financial Times newspaper.

“That, combined with a lower cost base will boost the industry’s contribution.

“Today, we can expect to make a contribution in the hundreds of millions of pounds, if not £1 billion, for the tax year 2017-18.”

According to figures from HM Revenue & Customs, the North Sea has already generated about £800 million of revenues in the first three quarters of the year to the end of December.

Oil & Gas UK said that since 1970, the North Sea oil and gas industry has paid almost £330 billion in production tax.

Wood Mackenzie, the consultancy, expects the North Sea industry to average 1.9 million barrels of oil equivalent a day in 2018 — its highest since 2010.

Last week, BP announced two new exploration discoveries in the North Sea that it said will help it double its production to 200,000 barrels a day by 2020 and keep producing beyond 2050.

“Future tax receipts will critically depend on oil price, the pace at which new developments come on stream and the industry’s ability to manage operating costs on the large, declining fields,” said Graham Kellas of Wood Mackenzie.