How Would Scottish Independence Affect the Region's Oil, Gas Industry?

How Would Scottish Independence Affect the Region's Oil, Gas Industry?
Rigzone outlines how Indyref2 could shape the region's oil and gas sector.

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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Any Guy  |  June 09, 2017
Well I wouldnt worry about it too much for now. The Scottish Nationalist Party has had a bit of a spanking in the UK elections yesterday, halving its vote count. The latest survey had independence at 40% yes / 60% no, so theres little popular appetite for it, and even then it will be a question in 2 years time after Brexit has been sorted. By then most of the platforms will have dried out because the oil majors stopped drilling for the last 2 years with the high oil price. The North Sea will not be the bonanza, it will be a liability with all those platforms that need decommissioning.
Alan Reid  |  June 07, 2017
Drivel. Westminster has used the Scottish North sea oil industry as a cash cow for generations. A independent Scotland would ensure the industry is well supported, instead of being raped by a Pro England, Anti Scottish Westminster.
steve andrews  |  June 07, 2017
It is Westminster that currently runs Scotland’s North Sea oil industry- and runs it very badly. Under independence the oil industry would be run along the lines of Norway’s wherein the last year £17,000Million was received in tax revenues while the UK received £43Million ie 411 times more than UK. For instance the UK tax payers paid Shell £80Million in tax rebates while Shell paid Norway tax of £2.7Billion – Shell then paid out £7.9Billion in shareholder dividends. For BP it was similar, £200Million in tax rebates. Both companies operate in 24 countries worldwide, only the UK alone received no taxes from either company. In other words Westminster completely mismanages the North Sea and fails to reap the potential. On one side of the north sea £17Billion, on the other side £43Million – that would not be allowed to happen under independence.