An independent Scottish Government would set up Scottish Energy Fund – a Norway-style sovereign wealth fund to finance new oil and gas exploration and to smooth receipts from oil income. The White Paper states:
We propose to establish a Scottish Energy Fund to provide investment for future generations and to smooth receipts from oil revenues.
Westminster governments have also failed to re-invest the proceeds of the North Sea to provide a long-term benefit to future generations. Stabilisation funds and sovereign wealth funds are common among oil and gas producing countries, with the UK being a notable exception.
Norway’s oil fund, for example, was established in 1990 and is now worth around £470 billion, equivalent to £90,000 per head in Norway, making it the largest sovereign wealth fund in the world.
In contrast, successive Westminster governments have accumulated debts which are now worth in excess of £1 trillion.
The oil and gas sector has been a major part of the economy of Scotland since the 1970s. Oil and gas production is estimated to have contributed around £22 billion to Scottish GDP in 2012.
Through the success of the last five decades, Aberdeen has become an international oil and gas centre of excellence, home to an industry that is leading the world in many areas, supported by strong academic research in Scotland’s universities.
In 2013, oil and gas was the largest single sector in the FTSE 100 Index of leading companies, and a sector in which Scottish firms are leading global players.
Scotland now has a second opportunity to steward our oil and gas resources, as well as supporting the growth of an industry that in many areas is the best in the world.
Overall, Scotland has the vast bulk of the UK’s offshore oil and gas reserves, which are estimated to have a wholesale value of £1.5 trillion.Record investment in 2013 points to a bright and lengthy future for oil and gas production in Scotland.
As well as the substantial reserves in the North Sea, there are now major developments taking place to the west of Scotland, especially west of Shetland.
Scotland is estimated to have the largest conventional oil reserves in the EU – around 60% of the EU total. Scotland is also estimated to have the second largest volume of proven gas reserves in the EU after the Netherlands.
For the sake of future generations living and bringing up their families in Scotland, we must not lose out on the opportunity that these remaining reserves provide.
This Government will make the creation of a Scottish Energy Fund an early priority. If we form the government of an independent Scotland we will invest revenues from oil and gas production for two purposes:
- to provide investment for future generations from a natural resource that can only be extracted once
- to provide income that can smooth receipts from oil revenues, recognising that these vary from year to year (as all tax receipts do)
The Fiscal Commission’s report on savings and stabilisation funds for Scotland concluded that there is clear merit in Scotland establishing both a short-term stabilisation fund and a long-term savings fund on independence.
A long-term savings fund will invest a proportion of the wealth from Scottish oil and gas production in financial assets. The fund’s operation will be a key factor in the management of
Scottish public finances, helping to lock in a strategy of prudent financial management, and strengthening Scotland’s credibility in international financial markets.