BP boss’s warning on Scottish independence

Bob Dudley said there would be 'uncertainty' but stressed he would still be investing in Scotland. Picture: PABob Dudley said there would be 'uncertainty' but stressed he would still be investing in Scotland. Picture: PA
Bob Dudley said there would be 'uncertainty' but stressed he would still be investing in Scotland. Picture: PA
SCOTTISH independence would create “big uncertainties” for BP, the boss of the energy giant has warned, in one of the most significant interventions in the referendum debate by a business leader.

ob Dudley, BP’s chief executive, said that there was a “question mark” over the firm’s future investment in Scotland due to the uncertainty over which currency it would adopt if Westminster blocked plans for the country to share sterling with the rest of the UK. The American also voiced his backing for the Union, revealing: “My personal view is Great Britain is great and it ought to stay together.”

Mr Dudley highlighted the extra costs to business, a threat to European links and a new tax regime as key concerns the company had about the SNP’s plans for an independent Scotland.

Hide Ad
Hide Ad

The attack on the SNP’s flagship plans for a currency union from the head of one of the world’s leading international oil and gas companies will come as a blow to the nationalists.

Mr Dudley’s intervention came after Bank of England governor Mark Carney recently warned that First Minister Alex Salmond’s plans to retain the pound in a currency union with the UK would mean the loss of key powers for an independent Scotland.

The BP boss emphasised that the firm was continuing to invest in Scotland. The oil giant has previously said it plans to invest £10 billion in the North Sea between 2011 and 2016, its highest ever investment in the region.

In 2011, BP pledged to remain in the North Sea for 40 years after winning approval to target hundreds of millions of barrels of oil west of Shetland in the Clair Ridge area. The entire field is estimated to contain seven billion barrels of oil.

However, Mr Dudley issued a stark warning that unanswered questions about the currency of an independent Scotland, and what taxes would be imposed on firms, could put some “big” investments at risk.

He said: “There’s enough uncertainty and talk about it and questions raised. It would create extra costs for our business. We have to duplicate the centres and do things, and, again, the currency question I don’t know the answer to.

“BP’s future in the North Sea in the event of independence would depend on what it really led to. We have got a lot of people in Scotland, we have got a lot of investments in Scotland.”

He added: “These are quite big uncertainties for us and, at the moment, we are continuing to invest at a pace because these projects are under way. But it’s a question mark. I think all businesses have a concern.”

Hide Ad
Hide Ad

The Scottish Government last night insisted investment in the North Sea would be secure under independence.

A spokesman added: “We would be happy to meet Mr Dudley to discuss the future of the industry. He has made clear these are his personal views and that the company is continuing to invest in Scotland.

“An independent Scotland with full control of its economy and huge resources will offer an attractive and stable environment for businesses in the offshore and other sectors.”

Former Labour chancellor Alistair Darling, leader of the Better Together campaign, said: “I hope more companies and business leaders speak out over the coming weeks and months. This debate is far too important to be left to politicians alone.

“Bob Dudley is quite right to express concern about the issue of currency. It is far from certain what currency we would use if we vote to leave the UK.”

The UK government has published a series of papers setting out the case against independence, with Chancellor George Osborne previously saying a shared currency with an independent Scotland was unlikely.

Scottish Labour’s finance spokesman, Iain Gray, said Mr Dudley’s intervention highlighted how major investments in Scotland could be at risk following a Yes vote.

Mr Gray said: “For many months now, the SNP have denied the referendum is causing uncertainty for investors.

Hide Ad
Hide Ad

“Bob Dudley, as chief executive of a company potentially investing £10bn in the Scottish economy in the crucial oil and gas industry, has made it crystal clear that the uncertainty is very real and that Scotland’s best future lies in the UK.”

The SNP government’s white paper on independence – its blueprint for leaving the UK, published last November – said the nationalists had a plan to retain and attract new investment.

But Scottish Secretary Alistair Carmichael claimed Mr Dudley’s remarks represented a major blow to those plans Mr Carmichael said: “Independence would have lasting consequences for Scotland and our business community. It is little surprise global corporates like BP and SMEs around Scotland have concerns.”

However, the pro-independence Yes Scotland campaign insisted a shared currency would benefit businesses north and south of the Border.

A Yes Scotland spokesman said: “A shared currency is in the overwhelming economic interests of both Scotland and the rest of the UK … the continued use of sterling has the support of the people of Scotland and the public in the rest of the UK.”

Meanwhile, the outgoing chief executive of Sainsbury’s, Justin King, yesterday commented on the issue of grocery costs in an independent Scotland.

He said: “Once it is a separate country, we and other retailers will take a view of what the cost structure is, and of course the revenue structure too. If you were to strike that today, there is no doubt Scotland is a more costly country in which to run a grocery retail business.”

John Fingleton, ex-chairman of the Irish Competition Authority and chief executive of the UK Office of Fair Trading, also remarked on possible price hikes in an independent Scotland.

Hide Ad
Hide Ad

He said: “Scotland is very sparsely populated and retailers carry that extra distribution cost out of the centre. If those costs are isolated to Scotland only, it will just push up the prices in Scotland and lower prices in England. All of the retail sectors where in-time distribution matters will be looking at this.”

Profile: Ups and downs of a career spent in oil and gas

BOB Dudley, BP’s chief executive, has a reputation as a straight-talking problem-solver.

Born in Queens, New York, he grew up in Hattiesburg, Mississippi.

He graduated with a degree in chemical engineering from the University of Illinois before attending Arizona’s Thunderbird Academy and gaining a Masters in information management then later obtaining an MBA from Southern Methodist University.

His entire career has been spent in the oil and gas industry, including a number of senior corporate development roles at Amoco, negotiating deals in the South China Seas, before it was taken over by BP in 1998.

From 2003-08 he was president and chief executive of TNK-BP, leading the company’s Russian joint venture with a group of Russian billionaires. A fall-out with the billionaires and government officials – who he said subjected him to “sustained harassment” – led to Dudley fleeing the country and going into hiding.

On his return to BP in 2009, he was appointed to the board, overseeing activities in the Americas and Asia. When he was made chief executive in 2010, investors had faith he would rescue BP, whose international image had been trashed following the Deepwater Horizon oil spill in the Gulf of Mexico and its disastrous PR management by his gaffe-prone predecessor, Tony Heyworth.

When BP profits halved in 2012 to £7.6 billion following penalty payouts after the disaster, in which 11 people died, shareholders were angered Dudley still received bonus payments worth around £6 million on top of his £1.1m basic salary for 2011.