Iain Gray: North Sea oil won’t smooth the way for Nats

In recent weeks the SNP has taken this to heart, arguing that an independent Scotland would prosper on the back of North Sea Oil. Finance secretary John Swinney even discovered a new “oil boom” over one weekend. Embarrassed by a leaked cabinet paper in which he warned colleagues that oil price volatility meant an independent Scotland would cut public spending, and struggle to afford pensions, he was sent out to discover an extra half million barrels of oil over a weekend. SNP conference resounded to various versions of the seventies’ slogan “It’s Scotland’s oil”.

That conference was in Inverness, where I grew up during the first oil boom. You knew it was happening. My Saturday job on a bakers van saw us deliver rolls to tens of thousands of hungry workers building oil rigs at Ardersier and Nigg. The rigs themselves were lined along the length of the Moray Firth ready to be towed out. Every family in town seemed to have someone working offshore.

I do not see that now, nor do I expect to again. The Better Together campaign rightly poured scorn on the SNP’s unilateral declaration of an oil boom, and reiterated the dangers of an economy dominated by a single, finite, price-volatile commodity. Oil would constitute almost 16 per cent of Scotland’s economy, and only twenty years ago that was 50 per cent. Revenues have swung from as little as £1 billion to as much as £12bn in recent years. Managing that kind of economic shock is exactly the problem Mr Swinney was telling his cabinet colleagues about in private.

This is only half the story though, and Better Together must not allow the SNP to caricature its argument as “oil is a liability not an asset”. Nor should it concede the claim that North Sea Oil has been “squandered” because we do not have a “Norwegian oil fund”. There may not be rigs queued up the Moray Firth, but there is a booming oil industry, especially around Aberdeen, and it is a success story of the devolved UK.

While the SNP looks to Norway, Norway is looking to Aberdeen. Norwegian companies Statoil and Aker are investing hundreds of millions of pounds in new HQs, creating thousands of jobs. The Korean national oil corporation has bought up local company Dana, while China’s SinoPec has invested billions in a joint venture with Talisman and the purchase of Nexen. Meanwhile, the world’s largest drilling company plans to do all of its global (non-US) training in Aberdeen. Aberdeen harbour is planning a major expansion to cope. Beyond Aberdeen companies such as Orion in Inverness or Cairn in Edinburgh are world leaders too. The industry employs 150,000 people in Scotland, ten times more than renewables.

A Lloyds survey showed that 83 per cent of Scottish based oil and gas companies expect growth next year. So there is an oil boom after all, but it does not look like the seventies because this is a mature, global industry looking beyond the North Sea.

A total of 40 per cent of companies in the survey derive less than a fifth of their income from the North Sea, and two thirds say that their planned expansion is overseas. Even the remarkable growth (profits up 40 per cent) of that most Scottish of oil companies, Wood Group, is in the fifty other countries around the world where it works.

This is an oil boom which can outlast North Sea oil, but it is the legacy of that asset. Exploiting deep and difficult North Sea reserves has made Scotland the global centre for cutting edge subsea technology. But the industry has also come to Aberdeen because we are perceived to be open to business and the sector is not dominated by a single national oil corporation. Crucially we also offer the English language and the stability of a large economy and a relatively strong currency. This is an industry which most fears the instability of countries whose economies are dominated by the very asset it exploits. The continuing success of our oil sector depends on those advantages persisting, not who owns how much of the continental shelf.

I doubt the oil industry will welcome the SNP’s decision to make it the core economic argument for independence. When I met industry leaders two years ago many felt unappreciated by a nationalist government whose attention seemed entirely fixed on renewable energy. Their current concerns are finding the skilled workforce they need and the cost of decommissioning. Decommissioning costs are exactly the kind of liability which a separate Scotland would find hard to deal with in a smaller economy. As for training, the Scottish Government programme of 25,000 apprenticeships includes only 115 in oil and gas extraction, a shockingly low figure.

Or take the example of divers. Scotland has a world class diving school, at Fort William, founded by Harold Wilson’s government to ensure that British workers got the chance of oil related jobs. When I visited in 2011 it was training divers from India, Vietnam and the Philippines, but not Scotland, because the loan schemes which Scottish workers used to use to fund themselves through their training no longer exist. Training is expensive, but the rewards are great, and the work is there, with offshore wind farms soon to need divers too. We could easily put this right if we stopped arguing about what the oil price will be in 2017 and started supporting the oil industry today.

Opponents of independence must not let oil become a “nationalist” issue. Well done to messrs Cable, Davey and Moore, not one but three cabinet ministers in Aberdeen last week to talk up oil. We should rise early, work late, and strike back with the positive story the oil industry’s success in the United Kingdom. It already transcends the North Sea in its reach and its life expectancy. It deserves better than a political narrative which has never moved on from “it’s Scotland’s oil”.

• Iain Gray is the Labour MSP for East Lothian