IT’S THE OIL, ISN’T IT?

There’s been a lot of discussion over the future of North Sea Oil during the debate on independence. The ‘Yes’ and ‘No’ camps clearly take partisan views on this valuable asset. It’s not often therefore that we see an impartial assessment – but one has just been published in a magazine called TCE (The Chemical Engineer).

Scotland would get 85% of North Sea Oil production, though there is a disputed area
Scotland would get 85% of North Sea Oil production, though there is a disputed area
The author, Sanjoy Sen, is not only a chemical engineer working as a consultant development engineer but he has also recently completed an LLM in oil and gas law at the University of Aberdeen.

As he points out, “A ‘yes’ in the referendum would see Scotland gain independence for the first time in 300 years. In the midst of a polarised debate on the need to split or stay united, there are questions to be answered on what effects independence would have on the North Sea oil & gas industry. If Scotland’s first minister Alex Salmond is correct, Scotland could finalise its separation from the UK as early as 2016, leaving those in and around the sector with what would feel like two short years to address a number of critical issues.”

These ‘critical issues’ include working out exactly where the boundary between the Scottish and English sections of the North Sea would lie. They also include serious decisions for a future Scottish Government about how to deal with what he describes as ‘external pressures’. As he explains, “’It’s Scotland’s oil’ proved an emotive SNP slogan in the 1970s but in today’s debate, the Scottish government recognises the importance of stability. To encourage continued investment, the government plans to engage with industry and to honour existing licences post-independence.”

He goes on: “There is likely to be influence from outside of the UK as recent buyouts of Nexen and Talisman have given China control of 10% of UKCS production. Aside from profits disappearing abroad, concerns have been expressed over external political pressures. Investment decisions by multi-nationals, comparing projects across their global portfolios, could also have a major impact on Scotland. Government intervention helped to resolve the recent Ineos Grangemouth dispute and prevent the site from closing down. Post-independence, such infrastructure would become even more critical; industrial action, unplanned outages or severe weather could cause major disruption to the national economy.”

This is an important article and deserves wider attention. To read it in full, follow the link above.