News that oil giants BP and GDF Suez have announced the discovery of a new field in the UK Central North Sea is welcome news indeed.
The find has been flow-tested at a maximum rate of 5,350 barrels per day and marks a further discovery success by two companies which have already extensive commitments in the North Sea.
This is GDF Suez’s third successful well this year and demonstrates its commitment to an active exploration and appraisal drilling programme in the Central and Southern North Sea and West of Shetland. BP, along with its co-venturers, is undertaking a £10 billion investment programme in the North Sea and has undertaken to spend more than £7bn in the next five years.
The news has, however, already triggered political controversy. The SNP lost no time in claiming the discovery raised “serious questions” over the “scaremongering on oil revenues” by pro-Union politicians ahead of last month’s independence referendum. Maureen Watt, MSP for Aberdeen South and North Kincardine, says Danny Alexander and the No campaign’s “oil and gas scaremongering now looks very foolish indeed” and that he should apologise for misleading the people of Scotland.
Two important developments of critical relevance to the pace and scale of future oil and gas revenues need to be borne in mind. The first, alluded to yesterday by the industry body Oil & Gas UK, is that North Sea exploration is facing severe investment and cost pressures. These were among the concerns raised by oil tycoon Sir Ian Wood, who counselled caution over the Yes campaign’s oil revenue projections during the referendum campaign.
The second is, of course, the price of oil, the movements of which can make fools of the most earnest forecasters. In recent weeks the spot price of Brent crude oil has fallen very sharply, by $28 from a peak of approximately $115 this summer when the independence battle was raging, to $86.44. The Scottish Government’s projections for oil revenues were based on a range of oil prices between $107.50 and $128 a barrel. But even before the recent price fall, as Fiscal Affairs Scotland pointed out in an analysis this week, North Sea oil and gas-related revenues for the UK in the first half of the 2014-15 financial year came to £1.1bn, almost £1bn less than received in the same period of 2013-14 – that is, just over half of last year’s total.
We can speculate as to the causes of this fall, but in any projection of North Sea revenues, it is imperative to bear in mind the volatility of the oil price and the havoc this can wreak for an administration that would have been heavily dependent on them to maintain commitments to health and welfare spending. On this consideration, while news of the latest oil find is encouraging, there should be no need to apologise for a politic circumspection when it comes to predicting the course of future oil revenues.
Flagging up common sense
O N THE Mitchell Hill, overlooking Dingwall, a dispute has broken out on what flag to fly atop a monument to Major-General Sir Hector Macdonald, or “Fighting Mac” – the Saltire or the Union Jack?
For many years, the Saltire has fluttered proudly over this monument. But now former serviceman Angus MacKenzie has called for the St Andrew’s cross to be taken down and replaced with the Union flag.
Mr MacKenzie says that this is the appropriate flag for someone who fought in the British Army and his call has been endorsed by the Clan Donald Society’s Highlands and Islands branch.
Never say that flags are unimportant, even on this remote Ross-shire hilltop. We have just fought a referendum in which flags often appeared to be divisive symbols. Mr MacKenzie insists that his request is unrelated to the outcome of the referendum. But for many people it will stir concerns that this has left behind deep divisions.
It is the custom of the country to fly the flag of that country atop monuments to those born in this country. This is long-standing policy. Sir Hector was a Scot, and Scottish soldier, first and foremost. Mr MacKenzie is correct to point out that soldiers fought for Britain, but Scots have a very distinct identity in the armed forces and it is inevitable that there is a desire in such circumstances to fly the Saltire. This is not a unique situation.
The past should not divide us and there is a solution here: a simple plaque should dutifully mark the distinguished service of Sir Hector to the British Army while retaining the Saltire to fly as it has done for so many years. Then, perhaps, we can all move on together.