Scottish independence ‘biggest risk’ facing North Sea oil and gas – energy advisor

Post Thumbnail

An energy policy expert has described Scottish independence as the biggest risk facing North Sea oil and gas.

Matthew Duhan, lead adviser on energy issues at advisory firm Global Counsel, claimed this was especially true related to decommissioning.

Speaking at an Oil and Gas UK event in London, he also said it was not “unimaginable” Theresa May might block a second referendum north of the border.

Asked about the key threats to the sector in the wake of the Brexit vote and going forward, he replied: “I still think probably fundamentally Scotland is the biggest risk, particularly when we are looking at decommissioning.

“The sorts of liabilities that currently on the UK balance sheet look very manageable, on the Scottish balance sheet might look less manageable.”

He added afterwards: “The issue is Scottish independence and how an independent Scotland manages the size of the decommissioning liabilities.”

But a spokesman for Economy Secretary Keith Brown insisted the North Sea offshore sector would remain an “important and valuable asset” for Scotland for years to come “whatever the country’s constitutional status”.

On the same question, Silke Goldberg, who is a partner in the global energy group of law firm Herbert Smith Freehills, highlighted the risk of tariffs when the UK is outside the EU.

She added: “I think that will play on people’s minds for supply chain issues, for trading of oil and gas.

“What happens if there are tariffs? What happens to the trade of oil and gas in the northern North Sea?”

She also raised the issues of securing a skilled employee base post-Brexit and potential changes to the regulatory regime.

With regards to the situation in Scotland, Mr Duhan said Mrs May was adopting a “deaf ear” strategy following the Supreme Court ruling that ministers are not compelled to consult devolved legislatures.

He added: “She also quite likes having a bit of antagonism because it gives the Scottish Conservatives something to stand on in Scotland and it basically squeezes out the Labour Party.”

Asked if he thought the prime minister might refuse to grant a second independence referendum, he replied: “I don’t think it’s unimaginable.

“I think if she wanted to make the case the UK is going through a pretty big transition and now’s not the time, I think probably outside of Scotland at least there would be a lot of time for that.”