WESTMINSTER has abandoned the North Sea oil and gas sector and control over it should be devolved to Holyrood.
That’s not simply our view, but that of two oil experts from Robert Gordon University in Aberdeen, Professors Peter Strachan and Alex Russell, who say that urgent action is needed to save the sector from “oblivion”.
Their paper highlights the crisis facing the industry and deconstructs the arguments consistently used by London to deny control to Holyrood, principal among them being that remaining oil and gas sources in the North Sea are running out.
The academics say there is still enough in the region to generate the same amount of revenue as they have over the past 45 years – £300 billion in direct tax income alone and many billions more in profits.
Strachan puts the figure at 22 billion barrels and admits that he’s being a “brave man” when he predicts the price will rise to $60 or $70 a barrel within the next three to four years.
But there has to be something to save, and he says the current practice of decommissioning North Sea assets is making that more difficult. It could, he warns, see the sector “collapse like a house of cards”.
If governments want any economic return on their substantial past investments, the industry needs to take urgent action now, such as that outlined by Energy Minister Fergus Ewing last January, as the current crisis began to bite.
Ewing set out the need for an exploration tax credit system similar to that introduced in the Norwegian sector a decade ago.
This allows companies to reclaim more than three quarters of exploration costs and has two distinct advantages – it increases investment and slows the rate of decline in production.
It also reduces the risk associated with exploratory drilling and acts as an incentive for companies to invest.
A year after Ewing suggested it, there has been no take-up from the UK Government.
Westminster should act now, before it becomes too late.
Experts: Westminster has abandoned North Sea - Holyrood should take over oil
Peter Strachan and Alex Russell: The fall of Brent - how did we get here?
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here