Most oil firms shrug off Scots independence fears, while SMEs favour change

North Sea oil rigToday’s annual Oil and Gas Survey – the last to be published before the Scottish Independence referendum – shows the industry is split on this key constitutional and economic issue.

In its 20th survey, Aberdeen and Grampian Chamber of Commerce asked North Sea oil industry firms to give their opinions on the impact that a vote in favour of independence would have for the sector as a whole. Firms were given four options: a positive development; make little difference; be an unhelpful development; or, it is difficult to reach a clear view at this stage.

Some 38% of respondents said a vote in favour of independence would make little difference to the sector, while 18% said it would be positive, with 12% saying it would be negative.

The feeling of uncertainty is underlined by the remaining one in three firms (32%)  who feel it is difficult to reach 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 UKCS it is difficult to see how Scotland would benefit either way.”

In a related question, 45% of firms responded that the referendum was having an impact on plans and investment proposals.

But while the percentage reporting that the referendum was’ not having an impact’ had reduced slightly since the last survey – from 57% to 55% – this continues to be the most common answer.

Among larger firms, the attitude was generally that the outcome would make little difference to the sector, or that it was difficult to reach a view.

Whether the outcome would have a positive or negative impact on the oil and gas sector is largely driven by smaller firms. Firms with fewer than 200 employees were most likely to say a vote in favour would be a positive development for the sector.

In explaining why they felt the sector would be unaffected in the event of a Yes vote for Independence, some contractors gave the following additional answers:

  •   “Most of the oil and gas operators are big internationals who can work anywhere in the world if conditions are right”
  •   “The oil and gas industry will be more important to an independent Scotland than it is to the UK, and therefore an independent Scotland will do more to stimulate and accommodate the industry”
  •  “A statement of how Scottish government will treat oil and gas will be positive and this in turn will drive investment”
  •  “It will create additional layers of compliance for our business”
  •  “The industry will lose the economies of scale and we will end up with escalating costs due to new regulators”

Uisdean Vass, oil and gas partner at Bond Dickinson – the legal services company which sponsored the report –  said: “With the referendum on Scottish independence less than four months away, the uncertainty arising from the actual referendum process has caused more angst amongst oil and gas companies than the prospect of an actual ‘Yes’ vote.

“There has never been a more radical year in the history of our UK oil industry than 2014, and there will probably never be another like it. In just a few months Scotland will vote in the Independence referendum. Whatever the result, change is inevitable.

 

 “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”.

“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. 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. Confidence, activity and investment remain high with new markets attracting a major share of spending along with staff training and research and development.

“Hopefully, this will help ensure Aberdeen becomes firmly established as a global centre of expertise for the industry.”

 

 

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