Fiscal and regulatory stability will be at the heart of an independent Scotland’s approach to the North Sea, Energy Minister Fergus Ewing pledged today in response to the Oil and Gas Expert Commission report, Maximising the Total Value Added.
Chaired by industry expert Melfort Campbell, the Commission’s report makes a series of recommendations designed to facilitate long term stability and predictability for the industry, which will improve the production profile, and enhance the climate for investment in the North Sea, including:
- International competitiveness, stability and predictability within the fiscal regime that is appropriate to the maturing environment of the North Sea;
- Proactive stewardship ensuring maximum generation of the Total Value Added for the nation; and
- A formal right of consultation for the new Regulator on fiscal or regulatory issues impacting investment or production in the North Sea.
Ewing said: “The Commission highlight the huge success of the industry, the substantial achievements it has made to date and with 24 billion barrels or more still to be recovered, the commission’s report is focussed on maximising the North Sea’s huge potential.
“The Scottish Government agrees with the Commission that a fundamental shift in the way oil and gas policy is formulated is long overdue, and that basing policy on Total Value Added (TVA) is central to fulfilling the North Sea’s potential.
“The UK Government, unlike our counterparts in Norway, has repeatedly missed the point – formulating policy based on short-term gain instead of focusing on long-term impact and the need to sustain investment in all areas of the oil and gas industry.
“I am pleased that the Commission fully back the proposal from Sir Ian Wood for the creation of an arm’s length Regulator that will enhance the stewardship of our natural resources.
“And since the vast majority of future oil and gas activity will be in Scottish waters, the Commission has determined that the new Regulator should predominantly be within the control of the Scottish Government in an Independent Scotland.
“The Commission’s report builds on Sir Ian’s findings by considering the fiscal regime, and we have been very clear that under independence, there will be no changes to the fiscal regime without prior consultation with industry.
“The Commission has further endorsed this approach by recommending that the new Regulator must have a formal right of consultation on any fiscal or regulatory change which could have an impact on investment or production.”
* Meanwhile, Professor Sir Donald MacKay – a former chairman of Scottish Enterprise, a former Economic Adviser to the UK Government for more than 25 years and chairman of the Scottish Mortgage Trust – has calculated that using oil price predictions from the Department of Energy and Climate Change (DECC) and official production forecasts from Oil & Gas UK would generate revenue of £31.8 billion between 2017-19 – almost double the £15.8 billion reported in recent Treasury figures.