Scottish referendum uncertainty impacting UK oil and gas firms

Almost half of oil and gas firms (45%) have reported that the Scottish referendum is impacting on plans and investment proposals

Ross Smith
Ross Smith

Almost half of oil and gas firms (45%) have reported that the Scottish referendum is impacting on plans and investment proposals.

The findings are part of the 20th Oil and Gas Survey, launched by the North East Chamber of Commerce and Aberdeen & Grampian Chamber of Commerce at survey sponsor Bond Dickinson’s Stockton offices at an event attended by a host of firms from across the sector.

The report also highlights the North East’s importance to the sector, with 13% of respondents saying the region is a key location for suppliers when procuring goods and services.

The figure is close to the Scotland score for a far smaller region – good news that demonstrates the importance of the North East to the supply chain. It also shows the region would benefit from investment and contracts secured across the sector.

It is the first time the NECC has partnered with its Scottish counterparts to launch the survey, which has been independently conducted by the Fraser of Allander Institute since 1996

The survey reveals oil and gas businesses are more confident about future prospects on the UK Continental Shelf (UKCS) than a year ago, but the industry, central to sustaining the UK economy, is facing number of challenges, with the study highlighting uncertainty surrounding the independence debate.

Robert Collier, chief executive at Aberdeen & Grampian Chamber of Commerce, said: “The oil and gas sector faces a challenging time but the industry is responding well, with many increasing investment in the UKCS and overseas. North East Scotland is pivotal to the Scottish and UK economy and it is vital that the oil and gas industries here are supported so they can maintain their impressive growth record. The effective implementation of the Wood Review would be a positive step in the right direction.

“The shortage of skilled labour and loss of staff to competitors is a key challenge to the sector and it is encouraging that so many companies are increasing their investment in staff training, as well as developing new markets and research and development.”

Critical to the future of the UK oil and gas industry is the implementation of the Wood Review, Sir Ian Wood’s recommendations for maximising the remaining offshore oil and gas resources. While supportive of the recommendations, survey respondents are less confident about how they will be implemented with almost half (48%) saying they are unsure if the review would lead to a significant change in the way the UKCS operates.

Richard Cockburn, energy and natural resources partner at Bond Dickinson, said: “With the referendum on Scottish independence less than four months away, the uncertainty arising from the actual referendum process has caused more angst amongst oil and gas companies than the prospect of an actual ‘Yes’ vote.

“Rising costs, falling production and a lack of exploratory drilling are the dark clouds over the North Sea. However, the Wood Review, in spite of the challenging nature of some of its goals, could provide a platform to positively revolutionise the province. These proposals, if implemented, have the potential to rival independence itself in importance, and we are constantly being asked by clients to advise on their potential implications for businesses.”

Views on Scottish independence are split, with 38% of respondents saying a vote in favour of independence would make little difference to the sector, 18% that it would be positive, and 12% negative. Uncertainty is underlined by the remaining one in three firms who feel it is difficult to reach a clear view.

NECC director of policy, Ross Smith, said: “Uncertainty must not be allowed to seep into an industry that has gone from strength to strength in recent years.

“This survey raises the main issues concerning oil and gas businesses and those on both sides of the independence debate must pay heed to the results and make a concerted effort to engage with this important sector and clarify what happens post-September.”

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