The headline finding of today’s survey is that the Scottish independence referendum is impacting on the plans and investment proposals of 45% of firms in the oil and gas sector.
Be that as it may, our experience, from working with a wide variety of upstream and service sector clients is that concerns about Scotland’s constitutional future have failed to dent investment activity or confidence in the UKCS (UK continental shelf). In fact, both are rising.
It is heartening to see this reflected in the survey results, with 35% of respondents reporting an upward trend in investment in the UKCS over the past 12 months and just under half planning to increase their investment spend over the next two years.
Welcome too is the finding that 37% of oil and gas firms are more confident about their future prospects on the UKCS than they were a year ago.
There are certainly challenges, and a significant proportion of respondents point to uncertainty regarding Scotland’s constitutional future.
It should be remembered, however, that change has been a constant since the introduction of devolution by the Scotland Act 1998.
Regardless of the outcome of the referendum, that change will continue and will always be part and parcel of making business decisions.
What is certain, however, is that fiscal instability and complexity are inimical to activity in the UKCS.
As the survey shows, tax relief and capital allowances are the most frequently cited key constraints to UK oil and gas businesses.
The revision of the fiscal regime recommended by the Wood Review should be implemented as a matter of urgency.
Clare Munro is the Aberdeen-based head of energy and infrastructure at law firm Brodies
