Oil Firms Opt for Stability, Urge Scotland to Stay in UK

Thursday, March 06, 2014

Reuters - Royal Dutch Shell has become the second energy heavyweight to urge Scotland to stay in the United Kingdom as the campaign for Scottish independence battles mounting opposition from businesses.

Shell is a key player in the North Sea oil and gas fields off Scotland and its Chief Executive Ben van Beurden said a vote for independence on Sept. 18 would mean greater uncertainty for the energy industry.

Last month, the boss of BP warned Scottish independence could cause "uncertainties" for his company.

Other oil companies in the North Sea on Thursday stressed the importance of predictability for their operations, joining a growing number of financial services companies voicing concerns about the impact of independence but avoiding political comment.

Another of Scotland's largest companies Aggreko, a provider of temporary power generators which has its headquarters in Glasgow, joined the chorus on Thursday.

It said independence would likely add significantly to its administration costs as its UK operations would have to be split into two trading entities.

Opinion polls have the independence movement trailing with only about one third of voter support but the gap in the polls has narrowed this year as the debate gathers pace.

Van Beurden said he valued the continuity and stability that the UK offered, arguing for its continued inclusion of Scotland and membership of the European Union.

"We'd like to see Scotland remain part of the United Kingdom," Van Beurden told a company event in London on Wednesday evening as reported by the BBC.

"We're used to operating in uncertain political and economic environments. But, given a choice, we want to know as accurately as possible what investment conditions will look like 10 or 20 years from now."

Currency, Tax Concerns
Scotland's Energy Minister Fergus Ewing offered to meet Shell to discuss the future of the oil and gas industry if Scotland votes to end its 307-year tie with England.

"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," Ewing said in a statement.

Norway's Statoil, also a major operator in the North Sea, said it stood by a statement made by industry organisation Oil & Gas UK, which said it was essential the independence debate did not create any instability.

That view was echoed by TAQA, a subsidiary of the Abu Dhabi National Energy Company.

"Predictability and long-term planning are what the industry requires of any government, particularly in the fiscal regime and the licensing and regulatory framework," said a spokeswoman.

Several financial services companies have raised concerns about the risks, with Barclays and state-backed Lloyds Banking Group joining the list this week.

Among their concerns, companies have highlighted uncertainty over what currency would be used in an independent Scotland, how tax and regulatory regimes might change, the cost of doing business and whether EU membership would be feasible.

Two airlines, however, British Airways and Ryanair , have said Scottish independence could be good for their businesses due to proposals to abolish air passenger tax.

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