Duncan Hamilton: Oil boost could prove the catalyst for independence at last

IT IS a strange day when something ‘British’ will be the toast of next weekend’s SNP conference. But these are strange times and BP (formerly British Petroleum) has just announced a £4.5 billion investment in the North Sea which will impact significantly on the impending independence referendum. For in revealing the vast oil reserves which will be pumped from Scottish waters up to and beyond 2050, another line of Unionist defence has been breached.

For decades, we have been told that Scottish oil was about to run out. Wendy Alexander even once gave us a specific date – all gone by 2030. Fortunately she doesn’t work for BP, whose chief executive tells us 250,000 barrels a day will be produced by North Sea operations until that date, and production will continue to 2050 and beyond.

Ah yes, said Unionists, but the price won’t be high. Oil, they assured us, would trade at about $30 to $40 a barrel. In reality it is now between $85 and $110 a barrel. Are oil prices volatile? Sure, but the spectrum of prices is still literally multiples of the projected figures Labour were previously punting as conclusive proof that independence would ruin us all.

That corrosive negativity cannot be sustained in the face of what BP and others are now doing. Those companies are making cold, hard business decisions based on detailed research and drilling. They say this is a massive resource with a big future. Forty per cent of the oil and gas in Scottish waters is still to be extracted and half of the total revenue is still to be realised.

The political impact should not be underestimated. Such massive investment in the future of oil production for the next half century underscores that we, the people, have the power to choose. It tells us that we can express that constitutional preference with confidence, and without fear. Yes, this is a finite resource and £300 billion raised over 40 years from the North Sea has already been spent. So be it – those failures are in the past. What matters is the future and it may well be that Scots prefer now to invest in a Norwegian style oil fund rather than subsidising tax cuts to re-elect the Westminster government of the day. It is our choice – and ours alone.

This investment also nails another traditional Unionist argument: that the mere possibility of an independent Scotland would, of itself, cause major companies to flee the country. That argument was always dubious, and now is demonstrably bogus. Unless, of course, you think that the public affairs department of BP is so utterly incompetent that it failed to notice the SNP winning an election and announcing an independence vote. Not likely, is it? The oil at Clair Ridge in Shetland apparently comes on stream in 2016, by which point Scotland could already be well on the way to independence. Has that prospect bothered BP? Nope. Indeed, there’s a further £3bn going into other fields. Does that look like investment flight to you?

In fact, arguably the real threat to long-term investment in oil exploration comes not from Edinburgh, but from London. It is Alex Salmond who is championing reforms to allow oil companies to get a minimum rate of return from investment before being stung by the UK government’s £2bn tax rise. It is those UK tax hikes which prompted the chairman of Conoco-Phillips (the third biggest oil company in the US) to describe the UK as “a difficult place to invest”.

I simply make the point that not only is investment demonstrably unaffected by the prospect of independence, but the status quo is more of a threat to Scottish interests.

All that said, don’t expect to see a return to the “It’s Scotland’s Oil” campaign in the referendum. The argument has moved so far in the intervening decades and this news, positive though it is, is really simply an addition to a wider, pro-Scottish narrative. In the 1970s “independence” meant something very different to the shared sovereignty of a modern, independent, European nation. Scotland in 2011 is a different prospect – now as focused on the massive possibilities of green energy as it is on oil. Oil is important, but happily the case for independence and the prospects for Scottish economic success now rest on so much more.

The referendum campaign is about aspiration, not grievance. That is what has delivered two SNP governments and it is what chimes with the mood of modern Scotland. Yes, it’s Scotland’s oil, but what matters is that Scots understand why it would be better for them and for their families if a government in Edinburgh and not in London could enjoy the fruits of its extraction.

Unionism is only now grasping the fact that it is has failed utterly to offer a positive post-devolution vision. This renewed debate on oil should therefore not be used just to revisit the historic failures of UK policy. Rather, this is about embedding in the Scottish psyche the reality that the future is whatever we – the Scottish voters – wish to make it.

What matters is not that 60 per cent of Scotland’s oil is gone but that 40 per cent remains. What interests Scots is whether that vast remaining wealth can this time fund and support a fair society and vibrant economy, focused on Scottish priorities. For all the success of the 1970s campaign, it ultimately yielded nothing. This time, a vote on independence is imminent. A ‘Yes’ vote may just be in the pipeline.