Scottish government condemns UK energy minister’s “hypocrisy” over future of oil industry

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By a Newsnet reporter

A letter sent by UK energy minister Charles Hendry, Conservative MP for Wealden in East Sussex, to the UK energy trade organisation UK Oil & Gas in which he implies that the North Sea oil industry would face greater uncertainty and risks should Scotland become independent, has been described as “hypocrisy” by the SNP.

In the letter, Mr Hendry claims that only the UK government is able to provide the “stable and consistent” regulatory and tax environment the industry requires, and adds that Westminster alone is capable giving the industry influence at a European level.

Mr Hendry strongly implies that Scottish independence would lead to greater risks for the vital industry, saying: “I am aware that the upcoming referendum on Scottish independence is a point of uncertainty that could cause concern to your members.

“I would like to assure you that the UK government will act in the best interest of the union by continuing to lay the foundations for a profitable future for UK continental shelf investment.”

However despite the “concerns” cited by Mr Hendry, a spokeswoman for UK Oil & Gas said last night that the Scottish referendum was not an issue for the industry, adding that the organisation “remained neutral”.  

Speaking to the Guardian newspaper, Malcom Webb chief executive of UK Oil & Gas, said:

“Oil & Gas UK is and has always been an apolitical trade association.  We are committed to working with all levels of government throughout the UK and in Europe to maximise support for the UK offshore oil and gas industry.”

The letter comes as the UK government’s Department of Environment & Climate Change is launching the 27th offshore licensing round, which will put on offer 2800 blocks in the North Sea and bring in millions in licencing fees for the UK government.  

In a statement announcing the sale, Mr Hendry said:  “This is shaping up to be a very prosperous year for the North Sea as we expect a substantial increase in field approvals.  With around 20 billion barrels of oil still to be extracted, the UK Continental Shelf has many years of productivity left.”

Mr Hendry’s letter to UK Oil & Gas is a clear indication that the Westminster government is deeply concerned about the loss of these revenues to an independent Scotland.  According to UK government figures, North Sea oil and gas is expected to generate £56 billion in revenue between now and 2018.  90% of the oil and gas deposits are reckoned to lie beneath the Scottish seabed.

A spokesperson for John Swinney, the Scottish finance secretary, responded to Mr Hendry’s letter, characterising it as “the height of hypocrisy”, adding:

“The only uncertainty to the offshore industry has been caused by the UK Government’s smash and grab tax raid on the North Sea, costing the industry an extra £2 billion a year and threatening thousands of jobs.”