By Martin Kelly
Unionist politicians and others in the anti-independence campaign have been criticised for continuing to talk down Scotland’s oil and gas industry.
The criticism from the SNP follows a series of forecasts and claims from those who oppose independence that downplay both the extent of the revenue the sector will generate and the amount of oil reserves still to be extracted.
The issue of Scottish oil and gas has taken centre stage in the referendum debate with Westminster and Edinburgh hotly disputing the financial benefits the sector will bring to the economy.
Following a series of pessimistic claims the SNP has accused the anti-independence campaign of being ‘obsessed’ with talking down the future of Scotland’s oil and gas industry.
Commenting, Aberdeen South and North Kincardine SNP MSP Maureen Watt said:
“With such relentlessly negative comments about the future of Scotland’s oil and gas sector, people working in the industry must really be asking themselves if it is safe in the UK’s hands.
“Oil and gas will be a bonus for an independent Scotland – not the basis of it. Let’s remember that in every single one of the last 30 years, the amount of tax revenues generated per person in Scotland was greater than for the UK as a whole, and even without a drop of North Sea oil, Scotland’s economic output per head is 99 per cent of the UK average.
“Only in the minds of the No campaign could all of this be seen as a bad thing – they are simply obsessed with talking the industry and Scotland down.”
The Scottish Government this week published a detailed policy paper outlining proposals to maximise the return from Scotland’s extensive North Sea resources. Among other things, the paper noted
• There are some 24 billion barrels of recoverable oil & gas remaining in the North Sea with a wholesale value of £1.5 trillion. This means that more than half the value of North Sea oil is still to be extracted.
• Research by Professor Alex Kemp suggests that almost all oil production (98.8 per cent) and around 60 per cent of total gas production over the next three decades is expected to take place in Scottish waters.
• An independent Scotland could produce six times its domestic oil demand and three times the country’s domestic gas demand based on current production.
However, following publication of the figures, the No campaign attempted to ridicule any suggestion that Scotland’s oil industry has a bright future.
Better Together head Alistair Darling accused Alex Salmond of having “inflated the amount that he thinks is left in the North Sea to something like 12 times what the independent experts say.”
However, Mr Salmond had used an accepted industry figure of 24 billion barrels – which was also in the UK Government’s oil and gas industry strategy paper published in March.
Underpinning many pro-Union claims were forecasts from the Office of Budget Responsibility [OBR] which said that the revenue from the oil and gas sector would shrink dramatically over the next 28 years. However the body, which was created by Tory Chancellor George Osborne in 2010, has faced criticism after a series of poor forecasts and claims that its oil forecasts are politically motivated.
The OBR, which has an appalling track record on predictions, has seen its previous estimates on oil and gas criticised by industry experts and academics alike.
Speaking to Newsnet Scotland last December, respected oil economist Professor Alex Kemp challenged the OBR forecasts and said: “The OBR’s combination of low production estimates with low price estimates is pessimistic compared with other predictions including our own.”
In March Professor Kemp describing the OBR’s revised forecasts as “contrary to the evidence from the industry.”
Others to challenge OBR predictions included Chief Executive of Oil and Gas UK, Malcolm Webb who said that tax revenues can now be confidently expected to rise over the coming years.
Speaking to energy magazine ‘Enterprising Energy’ earlier this year, he said:”…the projects approved in 2011 and 2012 alone will over time produce more than two billion barrels of oil and gas, generate £100 billion value for the economy and an additional £25 billion in production taxes for the Exchequer.”
Challenging claims that the sector is running down, Mr Webb added: “The North Sea oil and gas sector, contrary to what some sources say, still has a long productive life ahead of it; we estimate 50 years or more.”
Further evidence of the huge revenue still to be extracted from Scotland’s waters came in May when economists at the Paris based Organisation for Economic Co-operation and Development (OECD) forecast that the price of a barrel of oil will rise to between $150 and $270 throughout the coming decade.
The OECD envisaged a baseline value for a barrel of oil of $190 which, they said will lead to an independent Scotland benefiting to the tune of between £2.25 trillion and £4 trillion.
It also emerged that shortly after its creation, Alistair Darling himself accused the OBR of having been politicised. Speaking to the Financial Times in 2010 Mr Darling, who heads the anti-independence alliance Better Together, said:
“Right from the start the Tories used the OBR not just as part of the government but as part of the Conservative Party. They have succeeded in strangling what could have been a good idea at its birth.”
Maureen Watt added: “I don’t think we need take any lessons from Alistair Darling on forecasting oil reserves. The hypocrisy of the No campaign is laid bare by Mr Darling’s own description of the Office for Budget Responsibility, when he said: ‘Right from the start the Tories used the OBR not just as part of the government but as part of the Conservative Party’ – yet now he is perfectly happy to rely on projections which are based on the Westminster Government’s own production forecasts, which are substantially at variance with those of the industry and expert analysts.
“And this week, in his desperation to talk down the oil industry, he made the ridiculous assertion that there are only two billion barrels of oil left in the North Sea.
“Westminster politicians have form on this going back decades – only recently Denis Healey admitted that the Labour Government in the 1970s deliberately downplayed the value of North Sea oil because they were worried about its effect on the independence debate.”
Lord Healey, speaking in an interview with Holyrood Magazine admitted that Labour hid the true value of oil from Scots in order to prevent support for the SNP rising.
“I think we did underplay the value of the oil to the country because of the threat of nationalism …”
Ms Watt continued: “Fundamentally, there is no chance of Alistair Darling – or anyone in the No campaign – ever saying anything positive about the future of Scotland’s oil and gas industry.
“With the right handling, Scotland’s oil and gas industry can continue to thrive for many decades to come – and the constant negativity from the No campaign makes it ever more clear that this can only happen in an independent Scotland.”
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