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Scottish independence: Rival North Sea oil visions set out Scottish independence: Rival North Sea oil visions set out
(35 minutes later)
The Scottish and UK governments have set out competing visions for the future of North Sea oil and gas.The Scottish and UK governments have set out competing visions for the future of North Sea oil and gas.
Scottish First Minister Alex Salmond called for a Norwegian-style approach, under independence.Scottish First Minister Alex Salmond called for a Norwegian-style approach, under independence.
But UK Energy Minister Ed Davey said reserves could be better managed with Scotland as part of the Union. Prime Minister David Cameron said reserves could be better managed with Scotland as part of the Union.
Both the Scottish and UK government cabinets are meeting separately in the Aberdeen area, to argue the case for their proposals.Both the Scottish and UK government cabinets are meeting separately in the Aberdeen area, to argue the case for their proposals.
The two events came as Westminster ministers said they would fast-track plans to get the most out of remaining UK offshore oil and gas, in the wake of an industry review which included calls to set up a new regulator.The two events came as Westminster ministers said they would fast-track plans to get the most out of remaining UK offshore oil and gas, in the wake of an industry review which included calls to set up a new regulator.
The future of North Sea oil and gas has been a major campaign battleground, ahead of the 18 September Scottish independence referendum. The future of North Sea oil and gas has been a major campaign battleground ahead of the 18 September Scottish independence referendum.
Mr Salmond has outlined plans to earmark about a tenth of oil and gas tax revenues - about £1bn a year - for an oil fund similar to the one operated in Norway.Mr Salmond has outlined plans to earmark about a tenth of oil and gas tax revenues - about £1bn a year - for an oil fund similar to the one operated in Norway.
This, he said, could create a £30bn sovereign wealth pot over a generation.This, he said, could create a £30bn sovereign wealth pot over a generation.
The first minister, who has been holding a meeting of his cabinet in Portlethen, welcomed the prospect of a new regulator for the oil industry, but rejected Prime Minister David Cameron's claim that the "broad shoulders" of the UK could better support the North Sea oil and gas industry. The first minister, who held a meeting of his cabinet in Portlethen, welcomed the prospect of a new regulator for the oil industry, but rejected Prime Minister David Cameron's claim that the "broad shoulders" of the UK could better support the North Sea oil and gas industry.
He said an independent Scotland would "run oil and gas a great deal better" than Westminster had, and said Scotland needed "the Norwegian approach to things as opposed to the Westminster approach".He said an independent Scotland would "run oil and gas a great deal better" than Westminster had, and said Scotland needed "the Norwegian approach to things as opposed to the Westminster approach".
Asked whether an independent Scotland could withstand volatility in the oil market, Mr Salmond added: "It's not just a question of what happens one year, it's what happens over the next half century, and the idea that you wouldn't want be stronger having control of your own natural resources, given what we've seen in the past, is an absolute lunatic one. Asked whether an independent Scotland could withstand volatility in the oil market, Mr Salmond told the BBC: "Of course people in Scotland, in Aberdeen in particular, just look across to Norway where a country smaller than Scotland, more oil and gas dependent than Scotland, has handled its resources infinitely better than Westminster.
"Why should Scotland be the only country in the world which wouldn't be better off having for having massive oil and gas resources? "It hasn't been so much the broad shoulders of Westminster as the vast cavern in the Treasury over the last 40 years where they've accumulated massive oil and gas revenues from Scotland.
"We've got the exploration, the development, the potential, but the revenues have been siphoned off by the London exchequer. Little wonder the chancellors, like George Osborne, want to hang on to them." "The reason they want to hang on to Scotland's resources is that they've done so well out of them over the last 40 years. I think the next 40 years should be Scotland's turn."
The Scottish government's Fiscal Commission, in October 2013, said there was "clear merit" in an independent Scotland setting up two oil funds - a short-term "stabilisation" fund to buffer the effects of volatility in the oil market, and a long-term savings fund to ensure future generations benefited from the wealth.The Scottish government's Fiscal Commission, in October 2013, said there was "clear merit" in an independent Scotland setting up two oil funds - a short-term "stabilisation" fund to buffer the effects of volatility in the oil market, and a long-term savings fund to ensure future generations benefited from the wealth.
The review produced for the UK government by businessman Sir Ian Wood, made several recommendations, including revitalising exploration to ensure recoverable oil and gas resources in the UK are fully explored and exploited.The review produced for the UK government by businessman Sir Ian Wood, made several recommendations, including revitalising exploration to ensure recoverable oil and gas resources in the UK are fully explored and exploited.
Westminster ministers said the changes would produce an extra three to four billion more barrels of oil.Westminster ministers said the changes would produce an extra three to four billion more barrels of oil.
Mr Davey told the BBC: "Scotland would be very reliant on oil and gas revenue and, with the oil price being so volatile, with decline in North Sea revenues, I think that would expose the finances, the public spending of Scotland very seriously," he said. The Prime Minister visited a North Sea oil rig ahead of his cabinet meeting, which is being held five miles away from the location of the Scottish government session.
"What we are showing today in the Wood Review is that Westminster will manage the oil and gas reserves that the UK has in a far more effective way and that's great for Scotland." Mr Cameron said: "Because we are a top 10 economy we can afford the tax allowances, the investment, the long term structure that is necessary to make sure we recover as much from the North Sea as possible."
Mr Davey added: "Scotland has benefited from North Sea oil, let's be clear about this. He added: "I profoundly believe the United Kingdom will be better off if we all stay together.
"It is the third booming region in the UK. After London and the South East, Scotland is doing incredibly well, as part of the UK." "We all bring things to this United Kingdom and I've been very clear to say on behalf of the rest of the United Kingdom to the people in Scotland we want you to stay.
"We think that we'll benefit by you being in the United Kingdom, by keeping this family together, but in the end the choice has to be for people in Scotland."
The first North Sea oil came ashore in June 1975 and production is thought to have peaked in 1999, with more than 40 billion barrels extracted so far.The first North Sea oil came ashore in June 1975 and production is thought to have peaked in 1999, with more than 40 billion barrels extracted so far.
Although the oil and gas are now tougher to extract, the reserves are substantial - between 15 billion and 24 billion barrels of oil equivalent - meaning possibly another 30 to 40 years of production. And there could be new discoveries such as the fields west of Shetland.Although the oil and gas are now tougher to extract, the reserves are substantial - between 15 billion and 24 billion barrels of oil equivalent - meaning possibly another 30 to 40 years of production. And there could be new discoveries such as the fields west of Shetland.
But concerns over falling production led the UK government to ask Sir Ian to review the offshore industry.But concerns over falling production led the UK government to ask Sir Ian to review the offshore industry.
He said the UK government's Department of Energy and Climate Change (DECC) was "significantly underresourced and far too thinly spread" to effectively manage the increasingly complex business and operating environment.He said the UK government's Department of Energy and Climate Change (DECC) was "significantly underresourced and far too thinly spread" to effectively manage the increasingly complex business and operating environment.
The Scottish cabinet usually meets in Edinburgh, but regularly holds sessions in town and cities across Scotland, especially in the summer months. The Scottish cabinet usually meets in Edinburgh, but regularly holds sessions in towns and cities across Scotland, especially in the summer months.
Mr Cameron's predecessor as prime minister, Gordon Brown, held a meeting of the UK cabinet in Glasgow in 2009.Mr Cameron's predecessor as prime minister, Gordon Brown, held a meeting of the UK cabinet in Glasgow in 2009.
The UK cabinet had last met in Scotland in 1921 - when Winston Churchill was the Colonial Secretary and a Liberal MP for Dundee. Before that, the UK cabinet had last met in Scotland in 1921.