Oil and gas policy ‘should be decided in Aberdeen’

GOVERNMENT policy and decision makers responsible for oil and gas taxation and regulation should be moved from London to Aberdeen, according to an economics pressure group.

Economists in the N-56 think tank want energy policymaking moved to Aberdeen. Picture: Craig Stephen

Decentralising energy policy to the north of Scotland would replicate the arrangement in Norway, where policy makers in the petroleum directorate (Om Oljedirektoratet) are co-located with the industry in the Norwegian oil capital, Stavanger.

N-56, a think tank of economists brought together by the Scottish businessman Dan Macdonald, recommends that this is done whatever the result of the Scottish independence referendum next month.

It has also called for a more competitive tax regime for the North Sea and the creation of a hydrocarbon investment bank to boost investment in the sector.

It calls for a long-term oil and gas industrial development plan to foster economic growth, also similar to that adopted in Norway where policy has been developed by government, the industry and others working collaboratively.

These policy ideas are contained in the latest Scotland Means Business report from N-56 titled Oil And Gas – A Pivotal Moment, due out this week. It is one of a series of reports which aim to propel Scotland into the top five wealthiest countries in the world.

The report was prepared by energy consultancy Tulloch Energy and policy and economics consultancies DAMVAD (Norway, Sweden and Denmark) and BiGGAR Economics (Scotland).

Martyn Tulloch, company officer at Tulloch Energy, said: “There is an urgent need for an all-encompassing industrial development plan, far exceeding the scope, scale and ambition of the myriad of existing strategies, business plans and similar initiatives.

“Scotland enjoys a leading position due to its long-established industrial base, strong academic institutions and established support systems. We need to support the industry in a more significant manner.”

Separately, a report has found that the high oil price and political unrest in many drilling areas has led to a sharp spike in major arbitration cases as energy companies look to the UK legal system to solve their disputes.

Research by legal firm Pinsent Masons found that the London Court of International Arbitration (LCIA) had received double the number of energy-related cases in 2013 compared with the previous year. At 45, the figure was the highest in five years.

Scott Johnston, an Aberdeen-based dispute resolution expert at Pinsent Masons, said the trend looked likely to continue.

Scottish lawyers are heavily involved in the cases, using expertise gained writing and enforcing North Sea contracts.

Johnston said: “High crude prices and continued geopolitical uncertainty across a number of jurisdictions have resulted in volatility in the market, which ultimately drives a surge in complex disputes across all industry sectors.

“The UK’s reputation for providing confidential, impartial arbitration expertise has prompted the oil and gas and wider energy industry to increasingly turn to the LCIA, while the relatively new Scottish Arbitration Centre is also attracting energy-related disputes.”