Fiscal and regulatory stability will be at the heart of an independent Scotland’s approach to the North Sea, Energy Minister Fergus Ewing has pledged.
Mr Ewing made the commitment in response to the Oil and Gas Expert Commission report: Maximising the Total Value Added – chaired by industry expert Melfort Campbell and which goes public this weekend.
The commission’s report makes a series of recommendations designed to facilitate long term stability and predictability for the industry, which will improve the production profile, and enhance the climate for investment in the North Sea, including:
* International competitiveness, stability and predictability within the fiscal regime that is appropriate to the maturing environment of the North Sea;
* Proactive stewardship ensuring maximum generation of the Total Value Added for the nation; and
* A formal right of consultation for the new Regulator on fiscal or regulatory issues impacting investment or production in the North Sea.
Welcoming the Commission’s report Mr Ewing said: “The work of the Commission in producing this important and comprehensive report is to be commended.
“The Scottish Government agrees with the commission that a fundamental shift in the way oil and gas policy is formulated is long overdue, and that basing policy on Total Value Added (TVA) is central to fulfilling the North Sea’s potential.”
Total Value Added is not just about the price realised for produced oil and gas and therefore revenues to Treasury, it includes the value generated by the entire supply chain, both at home and exports.
Mr Ewing added: “I am pleased that the commission fully back the proposal from Sir Ian Wood for the creation of an arm’s length regulator (for the North Sea) that will enhance the stewardship of our natural resources.
“And since the vast majority of future oil and gas activity will be in Scottish waters, the commission has determined that the new regulator should predominantly be within the control of the Scottish Government in an Independent Scotland.”
Speaking for commission members Prof Alex Kemp of Aberdeen University, Prof Rita Marcella of The Robert Gordon University, and offshore industry veteran Dick Winchester, who also sits on the Scottish Government’s Energy Advisory Board, chairman Melfort Campbell said: “The over-riding message is that we must no longer assess the value of the UKCS on tax take from production profits but on the total value generated in the economy.
“he result of doing this should lead to the recovery of the highest reserve estimates – around 24billion barrels oil equivalent, and maximum value generation for the economy.”
For an in-depth review of the Commission’s report, log onto our energy industry website www.energyvoice.com today; or read the July edition of Energy published tomorrow (July 7).
