Scottish independence not an issue, says oil giant chief

oil-rig.jpg
Oil giant Shell has said that Scottish independence will not
affect their North Sea investment plans

Scottish News: Scottish independence not an issue, says Oil giant chief

By Jennifer Elliott


A prominent figure of oil giant Shell has said that the company perceives no threat by the possibility of Scottish independence saying that it is the tax rates which will determine the future of the industry in the region, not the question of Scotland’s constitution.

Shell’s Chief Financial Officer, Simon Henry, when asked what the oil and gas firm’s plans are for the possibility of Scotland becoming independent, Mr Henry responded: “The answer is we are not planning.”

 

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North Sea investment

Despite the Anglo-Dutch firm announcing a fifteen percent drop in third-quarter profits, Shell has continuously underlined its enthusiasm for the investment health of the North Sea. The company recently announced it was paying £327mn ($525mn) for Hess Corporation’s interest in the Beryl area, further investing in the giant Fram field, with Henry also releasing plans for bumper investments.

Noting that Shell is a big shareholder in the huge Schiehallion redevelopment and Clair Ridge projects off Shetland, Mr Henry said: "For good, large projects the UK remains an attractive place to develop, especially oil.”

Scotland’s share

Speculation has continued over Scotland’s entitlement to North Sea revenues. Author of the Niesr report, Angus Armstrong, explained:

“If you draw a median line out across the North Sea from the border then ninety percent of the oil tax revenues will accrue to Scotland. If the calculation is done on the basis of population that that figure will be reduced to nine percent.

“The Geneva agreement on natural resources under the sea dictates that they are divided by the median lines. Most people accept that the Geneva approach is the standard approach. Which gives Scotland ninety-one percent of the revenue.”

However, regardless of the independence and ownership controversies, Shell have pledged a long-term commitment to the North Sea. Mr Henry said Shell intends to continue using the UK as its main investment vehicle in Europe.

Stable environment

Though the government is not of direct concern to the oil and gas giants, Henry has made it very clear that tax charges will have a large impact on Shell’s future in the region. The chief financial officer explained Shell hopes that whichever government controls the North Sea will reflect on the need to provide a "long term attractive stable investment environment".

The UK government has attempted to appeal to investors by introducing a series of tax breaks in recent months. However, Mr Henry remains unhappy about the Chancellor’s decision to increase the Supplementary Charge on North Sea profits – a charge that could be reduced by an independent Scottish government.

Shell is investing in giant projects it believes will underpin growth for years, ensuring the oil and gas industry will remain in the North Sea for the foreseeable future, regardless of how Scots vote in the 2014 referendum.

 

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published this page in News 2012-11-02 16:25:56 +0000