Key figures involved in the UK oil and gas industry have responded positively to the “No” result in the Referendum on Scottish independence that was announced Friday morning, with Scottish oil services tycoon Sir Ian Wood and Royal Dutch Shell CEO Ben van Beurden welcoming the result.
Just over two million people voted against independence, while 1.6 million voted for an independent Scotland, meaning that the “No” camp one the vote by 55 percent to 45 percent.
In a statement, Sir Ian Wood – author of February’s Wood Review on North Sea oil and gas that was commissioned by the UK government – said that he was “pleased the Scottish people had chosen the best of both worlds” and that the UK government must now deliver on its undertakings on wider devolved responsibilities to the Scottish Parliament.
“In oil and gas, there are two very important and urgently needed initiatives underway – the Fiscal Review and the setting up of the new Regulator, the Offshore Gas Authority (OGA), a key recommendation from my Maximising Economic Recovery Review. Our industry is currently struggling with a completely unacceptable low level of exploration and a significant number of our offshore assets potentially up for sale. Yesterday’s vote now allows both these vital change initiatives to be progressed and brought into play by UK Government as quickly as possible to enable us to attract more investment.
“The debate has also highlighted the impact of depletion on the Oil & Gas industry in the medium term and certainly areas like the North East of Scotland must begin to take this seriously, doing everything in the meantime to maximize the economic recovery of the remaining reserves, but also beginning to think about the implications of the inevitable decline of its major industry.”
Shell’s van Beurden said that the result reduces the operating uncertainty for businesses based in Scotland. He added:
“Shell will continue to work closely with both the UK and Scottish governments to help the industry deliver vital energy supplies through investment in the UK’s oil and gas resources. We look forward to continuing our proud association with Scotland.”
Industry association Oil & Gas UK was keen to stress that the result “does not and will not diminish the pivotal role played the Scottish Government” in supporting the offshore oil and gas industry.
Oil & Gas UK Chief Executive Malcolm Webb said:
“The Referendum campaign rightly revealed the important role the offshore oil and gas industry plays in our economy, both in Scotland and in the rest of the United Kingdom. This is understandable given this industry remains the UK’s largest corporate taxpayer and largest industrial investor, and its crucial role in helping assure thousands of well-paid highly skilled jobs as well as our energy security.
“To safeguard the industry’s future, it is particularly important that that the government now presses swiftly ahead with fiscal reform as well as the implementation of Sir Ian Wood’s recommendations to maximize the economic recovery of our oil and gas resource. The industry must not delay either in a cross-sector effort to bring its escalating costs under control.
“There has been a great deal of discussion about how much oil and gas resource remains to be produced from the UK continental shelf. Oil & Gas UK’s position remains that there could be between 12 and 24 billion barrels of oil and gas still to recover but that the above three pivotal challenges need to be resolved if we are to stand any chance of reaching the top half of this range.
” International law firm Pinsent Masons reiterated Oil & Gas UK’s view that the UK government must now press ahead with fiscal reform and other measures to shore up investment in the North Sea industry.
Bob Ruddiman, an Aberdeen-based partner and head of energy at the law firm, commented:
“It is unlikely the No vote will cause a sudden spike in oil and gas activity and investment, but a positive outcome from the Treasury’s fiscal review – likely to mean a simplified tax regime and lower tax rates commensurate with extracting difficult reserves from a mature basin – together with tangible action… will engender sustainable levels of investment.
“Many estimates of oil and gas reserves have been produced, traduced, rejoiced in and rejected during the Referendum campaign, but whether it is 15 billion or 24 billion barrels equivalent, in global terms that is a significant hydrocarbon resource which deserves and demands a consistent and ambitious stewardship.”