As the ‘hydrocarbon capital of Europe’, Aberdeen should not just be the ‘frontrunner, but the only runner’ as the new industry regulator headquarters, First Minister Alex Salmond told the UK Oil and Gas industry conference, which is being held in the city.
The First Minister also set out his vision for better stewardship of the North Sea and a stronger, renewed partnership between the sector and government in an independent Scotland, with “an approach which values partnership and consultation; prioritises stability and certainty; and which will see a long term commitment to effective stewardship.”
Salmond laid out the key components of this ‘government-industry’ partnership, including: –
- Tax stability. The Scottish Government has no plans to increase the overall tax burden on the industry, and commits to no changes made to the fiscal regime for oil and gas without prior consultation. This contrasts a record of sudden fiscal changes by successive UK Governments
- The industry regulator headquarters, and oil and gas policy officials to be located in Aberdeen, at the very heart of the sector
- The opportunity to invest in an oil fund from the first year of an independent Scotland, which could include investment in global low carbon projects.
Addressing delegates at the Aberdeen conference centre, the First Minister said: “We understand the importance of stability and certainty for Scotland’s energy sector to continue to prosper. In fact, we have already made it clear that there are no plans to increase the overall tax burden on the industry and we will not change the fiscal regime without prior industry consultation.
“The UK Government has been reported as saying that Aberdeen is a ‘frontrunner’ to host the new Regulator – but with independence, I can guarantee that Aberdeen will be the only runner as the only conceivable location for the Regulators headquarters. It should not be in pole position but in sole position.
“This crucial new body charged with maximising this resource of the North Sea must be a shared initiative and financed that way. A new Regulator should not be treated as a way for Government to cut its budget on oil and gas regulations, instead Government should continue to meet a proportion of the cost.”
He also repeated the SNP pledge to set up a sovereign Scottish oil fund if the people vote for Independence on September 18, saying: “The UK is the only major oil power which does not invest any oil revenue for the future. Independence will allow Scotland to do things differently – the Government of the day will have the option to start investing in an oil fund from the first year of independence.
“Great oaks from little acorns grow: Norway established its oil fund in 1990 with the first payment of £200 million made in 1996, and 18 years on it is worth more than £500 billion. During the same period, the UK has built debts of £1.2 trillion.
Oil & Gas UK chief executive Malcolm Webb emphasised Oil & Gas UK’s neutral stance on the independence referendum, stating: “This is of course a hugely important matter – but it is one for the people of Scotland and their politicians to debate and decide.
“Our role as the industry trade association is to respect the democratic mandate which emerges from the vote on 18th September and then engage with and represent our industry within the political reality which then prevails.”
“Meanwhile, this conference present us all with the opportunity to consider, debate and exchange views on the next phase of operations for our industry in the UK and how we can improve the current outlook.”
He added that Oil & Gas UK is very aware that radical change is needed if the UK is to maximise economic recovery from the UK Continental Shelf (UKCS): “Whilst current capital expenditure is at all-time high, exploration is in crisis, our cost base is increasing and average productivity levels have slumped,” he said.
“We simply cannot go on like this. We need radical improvement in regulation, in taxation and in the very way we conduct our operations if the UKCS is to be competitive again on the global stage – and let us not kid ourselves, right now we are not winning that competitive battle.
“We need to act urgently because the penalty for indecision will be permanent loss of indigenous oil and gas resource and the jobs, the taxes and the security of energy supply which that yet to be recovered oil and gas can provide.”
In addition to discussing his hopes for both Sir Ian Wood’s recent report and the upcoming Fiscal Review, Malcolm Webb commented that the current regulatory and fiscal frameworks are: “not the only areas ripe for change”, noting that Oil & Gas UK has structured its conference to enable delegates to join the debate on a whole spectrum of other relevant and highly topical issues from health and safety to environmental matters.
- The conference continues today (Thursday) – when Danny Alexander, MP, Chief Secretary to the UK Treasury, will speak on the potential of the UK Continental Shelf.