The oil and gas industry is vital to Scotland’s future, and the wealth it brings, if properly managed, could pay for public services that make real differences to the lives of everyone in this country.
Figures released by Oil and Gas UK last week show that the industry has seen £20billion of investment in the last two years alone.
The report by the industry body states that production from these last two years will rise to half a million barrels of oil a day by 2017.
Production from these investments will have significant economic benefits, paying an estimated £3billion in production tax in 2017.
Following a “yes” vote in next autumn’s independence referendum, 2017 would of course be the first full year of independence and thus it would be the people of Scotland who would decide how production taxes from North Sea oil are spent.
It can be hard to visualise what £3billion is worth – but for example it could pay the salaries of more than 100,000 nurses or around 80,000 teachers for a year. It could more than pay for Scotland’s current education and lifelong learning budget.
That is why I care so passionately about Scotland’s oil and gas sector. The industry supports around 200,000 jobs both directly and indirectly in Scotland, and there are around 2,000 oil and gas supply chain companies in Scotland, leading the world across a range of strengths. But the wealth from our oil can make a huge contribution to helping the whole of society – not just those who work in the sector.
Significant reserves remain in the North Sea – it is estimated that up to 24billion barrels of oil and gas equivalent remain, with a potential wholesale value of up to £1.5trillion. And it is estimated that in excess of 90% of the UK’s oil reserves lie in Scotland’s waters.
It’s clear we will continue to reap the benefit of oil and gas for decades to come – and that the world-leading skills and experience acquired in the sector will be vital for our renewables industry for decades after that.
This great wealth must be appropriately managed. The same Oil and Gas UK report found that oil and gas production in 2011 and 2012 had fallen by 30%.
The industry report says that much of this can be attributed to the effects of the UK Government’s tax changes in the mid-2000s. These changes resulted in uncertainty, deterred investment, and meant only 14 new fields were brought into use over these years.
Investment has since improved, as the £20billion invested in the past two years shows. But the impact of the tax changes were profound, and had not been foreseen.
Scotland’s oil and gas wealth is enormous – and the benefits it could bring to the people of Scotland are even greater.
These resources are much too valuable to be left in the hands of a Westminster government – they should be in the hands of the people of Scotland.
With the full powers of independence, we could ensure that the oil and gas sector receives the support it needs from government – and that the people of Scotland enjoy the full benefits the sector brings.
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