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Better together,

Special Report but questions remain and operators face spiraling

Scotland voted to remain part of costs associated with mature the United Kingdom in a historic asset integrity and marginal referendum, held 18 September. developments.

Aberdeen has recently seen

Sanjoy Sen gives his view.

redundancies and pay cuts with the supply chain under listair Darling and the “Better pressure to slash costs. All is

Together” campaign overcame not doom-and-gloom, however;

A a late scare in the opinion polls current West of Shetland devel- and have emerged triumphant in a hard- opments could catalyze further fought independence referendum duel. frontier exploration whilst

Up to a month ago, a “no” vote might the North Sea experience

UK Prime Minister David Cameron. Photo from 10 Downing Street.

have been considered a mandate to main- and technology is in demand tain the status quo but the last-minute Oil & Gas Authority) which must seam- worldwide.

pledge from “Team Westminster” (argu- lessly pick up the workload to maintain Fundamental to the future of the UK ably instrumental in swaying the result) investment and safety. (or Scottish) Continental Shelf is the appears a game-changer in Scottish and The “no” campaign’s late pledge successful implementation of the Wood

UK politics. included protection of the Barnett for- Report. While its fundamental concept

What these changes entail remains to mula; this would effectively preserve the (Maximum Economic Recovery, MER) be seen, but Scotland certainly looks set system by which most taxes are pooled was welcomed by both UK and Scottish to take on much greater responsibilities prior to distribution across the UK. Oil governments, its application could prove via a new “devo max” settlement. Upon revenues currently contribute to the challenging; industry insiders have independence, the oil and gas sector pool; if Scotland demands greater rights described Wood as a bigger issue than would have formed the largest sector over these, is there a disconnect with the referendum itself. Striking the bal- (almost 20% of GDP) of the Scottish Barnett? ance between encouraging cooperation economy; as “devo max” is thrashed out, And if Scotland successfully argues for and sanctioning against those who don’t it could feature strongly in discussions. exclusive oil revenues, how will it cope could prove an early test of Holyrood

To date, powers have essentially been with global oil price instability? One diplomacy.

devolved to Holyrood (e.g. health) or potential compromise is partial tax devo- While not the momentous event that reserved to Westminster (e.g. defense); lution (e.g. with the 32% supplementary a ‘yes’ vote would have been, these are could oil regulation and taxation charge solely to Holyrood) whilst also nevertheless unique and never to be now transfer fully to the Scottish retaining a form of Barnett. repeated times; Scotland (and the rest

Government or, uniquely, could it come

Although little discussed during the of the UK) will never be the same again. under a joint UK-Scottish arrangement? referendum campaign, decommissioning Opportunities and challenges await as

The latter introduces greater complexity remains the industry’s “elephant in the Scotland negotiates its newly-devolved in countries with federal systems of gov- room.” powers and oil may well be at the center ernment (the direction in which the UK

While industry body Oil & Gas UK of them. may now be heading); Newfoundland project a total spend of £35 billion, expe- and Canada have witnessed some spec- rience to date suggests this could escalate Sanjoy Sen, is a tacular clashes over oil revenues and rapidly. If tax revenues are devolved to chemical process management.

Holyrood, is it possible that tax relief engineer with 20

Over here, relationships could vary liabilities are also? years’ experience depending upon who’s in power; expect While the “yes” campaign contended primarily in the UK an SNP Scottish government and a oil would form merely a bonus within a North Sea. He holds

Conservative UK government to be some- buoyant overall economy, “no” warned of an MSc degree in what less aligned than if Labour regains a declining and volatile resource. Today’s petroleum engineer- power in both Holyrood and Westminster stark facts are undisputed, however, ing from Heriot-Watt University. He sometime soon. Note also that devolution and remain unchanged by the referen- recently attained a distinction in his LLM could complicate matters for regulatory dum result. Production is half the 1999 in oil and gas law at the University of bodies (such as the under-construction peak, exploration lies in the doldrums Aberdeen.

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