Scottish independence: Oil industry 'unfazed' by referendum result

generic oil platform The future of the North Sea has been a key battleground ahead of the referendum on 18 September

The North Sea oil and gas industry is unfazed by the prospect of Scottish independence, the authors of a report have suggested.

The Aberdeen and Grampian Chambers of Commerce (AGCC) study said uncertainty caused by the referendum had impacted on the investment plans of many firms.

But more firms said independence would be positive rather than negative.

And the report said the Wood Review had the "potential to rival independence itself in importance" for the sector.

Start Quote

While we find lots of interest in the referendum in the north east oil and gas community we do not find great concern about the result”

End Quote Uisdean Vass Bond Dickinson

The annual AGCC study was carried out in collaboration with the University of Strathclyde's Fraser of Allander Institute.

It found that 45% of the 700 firms which were surveyed said the referendum was impacting on their plans and investment proposals - an increase from 38% last spring.

However, 18% said they believed independence would be positive for the sector, while 12% said it would be negative and 38% said they did not believe it would make any real difference.

The remaining one in three firms felt it was difficult to take a clear view at this stage, with one respondent explaining that: "With no side giving any clear answers as to how they will help the UK Continental Shelf it is difficult to see how Scotland would benefit either way."

Firms with fewer than 200 employees were most likely to say a vote in favour of independence in the referendum, which will be held on 18 September, would be a positive development for the sector.

Uisdean Vass, oil and gas partner at law firm Bond Dickinson, which sponsored the research, said: "The survey's findings on the referendum are absolutely what we would have expected. Naturally enough, businesses - especially foreign-owned businesses - rarely agitate for constitutional change.

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"As it turns out, less than half of the firms which responded said the referendum was having an impact on plans and investment. Most of these, it is true, said that the referendum was seen negatively.

"However, when asked what they thought about the impact of a 'Yes' vote, the majority expressed no opinion.

"Of the minority who did express an opinion, a slight majority were favourable. While we find lots of interest in the referendum in the north east oil and gas community we do not find great concern about the result."

The Wood Review, which was led by former oil tycoon Sir Ian Wood, published a series of recommendations in February which were aimed at maximising the UK's remaining offshore oil and gas resources.

The UK government later said it would fast-track Sir Ian's proposals, including setting up a new regulator to oversee the industry.

Future prospects

The AGCC report said the oil and gas sector was supportive of the recommendations made by Sir Ian, but was less confident about how they would be implemented, with 48% of firms saying they were unsure whether the review would lead to a significant change in the way the UK Continental Shelf (UKCS) operates.

Mr Vass said: "Rising costs, falling (though stabilising) production and a lack of exploratory drilling are the dark clouds over the North Sea.

"However, the Wood Review, in spite of the challenging nature of some of its goals, could provide a platform to positively revolutionise the province.

"These proposals, if implemented, have the potential to rival independence itself in importance, and we are constantly being asked by clients to advise on their potential implications for businesses."

The research also suggested 37% of oil and gas firms were more confident about their future prospects on the UKCS than they were a year ago, compared with just 15% who were less confident.

Confidence was further evidenced by the 35% of respondents who reported an upward trend in investment in the UKCS over the past 12 months, the report's authors said.

Economic climate

Half of firms said they were scheduling an increase in investment spend over the next two years, with the most common focuses of investment being new markets, staff training and research and development.

Tax relief and capital allowances were the most frequently cited key constraints to UK oil and gas businesses, followed by skills shortages, the economic climate and the loss of staff to other companies.

Responding to the report, Scottish Energy Minister Fergus Ewing said: "This is not the first time we have heard that North Sea investors are relaxed at the prospect of a Yes vote and independence.

"And the men and women who work in the industry have shown an overwhelming 70% support for a Yes vote in a poll conducted by Oil and Gas People earlier this year."

Speaking on behalf of the Better Together campaign, which opposes independence, Scottish Labour MSP Richard Baker said the oil and gas report came "after similar comments from the boss of B&Q and the head of Scottish Engineering".

He added: "It is clear that uncertainty over currency if we leave the UK is forcing oil firms to delay investment in Scotland."

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