Oil & Gas Editorial: Scottish Independence Cannot Be Counted In Barrels Per Day
With the United Kingdom’s triggering of Article 50 to leave the European Union (EU) imminent, the Northern quarter of the Union is once again voicing its disquiet with the status quo.
In the breakdown of voting for the EU referendum in 2016, 62 per cent of the Scottish electorate chose to “remain” in the EU, in direct contravention to the 52 per cent of the total British electorate that opted to “leave”.
The disparity has given Scotland’s majority Scottish National Party (SNP) the impetus to put the ball in motion for a second independence referendum to be held between Q3 2018 and Q1 2019.
In 2014, Scotland voted “no” to becoming an independent nation by 55 per cent to 45 per cent. However, in the UK’s general election eight months later, the Scottish electorate gave the pro-independence SNP 56 out of 59 Scottish seats in the House of Commons.
The descent in oil prices was already underway when Scots went to the polls in September 2014, and opponents of Scottish independence have pointed to an overreliance on crude to plead the economic case for sovereignty.
Oil brings an estimated £10 billion per year to the Scottish exchequer and accounts for up to one fifth of the country’s annual tax revenue. That said, North Sea tax receipts fell to their lowest level in four decades in 2016, recouping only £538 million. On the eve of the Scottish independence referendum, tax income from crude stood at $2 billion.
In conjunction with the dramatic nosedive in North Sea profitability, the spectre of decommissioning is hanging Damoclean over hundreds of installations that dot the UK Continental Shelf.
An estimated £24 billion will have to be spent on the dismantling of oil and gas assets across 140 fields in the UK sector of the North Sea in the next five years, causing a revenue vacuum that cannot be filled with current levels of investment in a mature basin.
If St Andrew’s Cross is to flutter over the rooftops of a sovereign nation before 2020, it cannot be based on the fundament of Black Gold.