Independence for Scotland has suddenly emerged as a red hot topic in campaigns' for the upcoming election in Britain. And for companies with billions invested in the North Sea, it is an issue that will require and tactful handling.
Scottish nationalism, was put on the political agenda by an opinion poll that showed 30% of Scots favored seceding from the union with England and Wales.
SUPPORT FOR SECESSION GROWS
The nationalist call for secession had never before found such popular support. Previously, the opinion polls showed that, if anything, Scots favored a system of devolution, with a new Scottish assembly-possibly with its own tax raising powers working in parallel with the central government.
The latest poll disclosed a dramatic fall in support for this form of self-government, an idea that failed to win enough popular support in referendum in 1979. In the recent poll, only 27% favored the Scottish assembly vs. a previous level of 41%.
The poll caps a period of growing disenchantment among Scots toward an administration in Westminster that seems remote and often insensitive to Scottish aspirations. As a result, the ruling conservative party has consistently lost political support in Scotland, which returns a large block of opposition Labor members to Parliament in London.
With an election just around the corner, the poll results forced a rapid reevaluation of the Scottish scene by both main parties.
Conservatives favor the status quo, while Labor promotes devolution. But with the electorate apparently in no mood for either policy, the parties must evaluate whether more backing for secession will lead to an upsurge in support for the Scottish National Party at the election.
OIL'S ROLE
Oil has already been dragged into the independence debate. The proposed closure of Scotland's last steelworks encouraged the Scottish Nationalists to claim the size of North Sea oil markets should enable Scotland to support its own steel industry. This largely ignores the facts that large steel-consuming platforms and pipelines are already in place and that the developments of the 1990s will be less steel intensive.
For Scotland and the oil industry, the real danger from the independence debate is the possibility of introducing an element of uncertainty that will discourage new investment. The industry thrives on stability, and once the specter of new offshore tax regime in an independent Scotland is raised, then funds for future offshore development will be much harder to extract from managements based outside Scotland.
There is also the possibility that an independent Scotland might not include the Orkney and Shetland Islands, home to the terminals serving the northern part of the oil producing province.
In the debate before the devolution vote in 1979, the two islands groups made it clear they would prefer government from London before government from Edinburgh.
And if the islands chose not to become part of an independent Scotland, dividing the North Sea up on the median line principle would leave large chunks of offshore oil and gas production outside the control of the new state.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
