How Would Scottish Independence Affect the Region's Oil, Gas Industry?
Scottish independence from the UK could lead to fewer Scottish oil and gas jobs, according to Airswift CEO Peter Searle.
“If Scotland exits the UK this may create economic instability, which could negatively impact the oil and gas sector as companies might view the country as a less desirable place to operate,” Searle told Rigzone.
“In turn, this would likely reduce the number of available Scottish oil and gas jobs as companies look to move operations to more stable locations,” he added.
A Scottish exit could potentially create significant uncertainty within the wider UKCS (UK Continental Shelf) too, particularly with regard to issues such as the delineation of the Scottish Continental Shelf (SCS), the allocation of decommissioning liabilities and tax treatment, Rystad Energy Senior Vice President Mark MacLean said.
“The end result could lead to reduced capital spending in the UKCS and therefore recoverable resources falling well below our current estimate of 29 billion barrels of oil equivalent,” MacLean stated.
“In this case, both Scotland and the UK could miss out on the development of significant reserves and potential tax revenue,” he added.
Although admitting that it was difficult to say how Scotland leaving the UK would affect the oil and gas industry, Kevin Swann, UK upstream research analyst at Wood Mackenzie, supported MacLean’s prediction of uncertainty.
“So many of the details would be up for negotiation between the respective governments,” Swann told Rigzone.
“The only certainty would be a period of uncertainty for the industry as negotiations played out,” he added.
If Scotland does exit the UK and the maritime boundary is drawn using the Scottish Adjacent Waters Boundary Order 1999, or the Civil Jurisdiction Order 1987, the only main offshore oil and gas province left to England will be the Southern North Sea, MacLean said.
“There is only a small amount of exploration and appraisal activity communicated to occur in the SNS within the next 3-4 years, compared to the CNS [Central North Sea], NNS [Northern North Sea] and WOS [West of Shetland Isles] where the majority of activity is expected to take place,” he added.
The Rystad SVP also drew a question mark over decommissioning, a burgeoning sector on the UKCS representing a GBP 17.6 billion ($22.8 billion) opportunity from now to 2025, according to estimates from industry body Oil & Gas UK.
“The prospect of oil revenues being surpassed by decommissioning costs makes it difficult to determine a clear winner if Scotland leaves the UK,” MacLean said.
“An independent Scotland would argue that the UK should keep much of the liability having benefited from North Sea tax revenues for the past four decades, but significant uncertainty could arise and leave the UKCS as a whole worse off,” he added.
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