Scottish independence: Academic warns of legal wrangle over North Sea oil

Total Elgin-Franklin oil and gas platform and tug in the North Sea The North Sea oil and gas industry continues to bring in billions in revenue to the UK economy

A legal expert has warned that Scotland's share of North Sea oil could be subject to years of legal wrangling if the country voted for independence.

Prof John Paterson from Aberdeen University said dividing the resources would not be a simple process.

The warning came as predictions for the future value of Scotland's oil and gas was said to be £4 trillion.

The SNP has argued that an independent Scotland would be entitled to the vast majority of North Sea reserves.

Prof Paterson put his thoughts in a paper written for the David Hume Institute (DHI) in Edinburgh, which is holding a conference on the big issue of energy in an independent Scotland.

The academic told BBC Radio Scotland's Good Morning Scotland programme that the debate was "entering uncharted territory".

He believed there was a range of issues that would need to be resolved sooner rather than later, including;

  • looking at the international maritime boundary
  • the issue of what to do with existing oil and gas licences
  • establishing the regulatory architecture to deal with oil and gas which "would be the most important aspect of the economy".

Prof Paterson said: "Take the boundary issue, experience across the globe indicates these are not straightforward issues to resolve.

"The questions on the energy question, which is never far from the economic part of the independence debate, are how you assess both risk and return, and how much appetite for risk - both downside and upside - Scottish voters will have when they vote in September next year.

"To watch the rate at which pounds, dollars, euros, Chinese renminbi and Korean won are being drilled into the North Sea and West of Shetland, you wouldn't think there's much concern about constitutional change.

"Investment in UK oil and gas reached a heady £11.4bn last year, and is on track for £13bn this year. These companies are used to working across international boundaries, and multiple tax regimes."

Who has a right to North Sea oil?

Prof Alex Kemp on the oil sector

"It can take many years of negotiations, or indeed dispute resolution procedures, to reach agreement on these matters.

"In the meantime, of course, the uncertainty can have an impact on economic activity in disputed areas."

But a statement from the Scottish government said the legal situation was clear.

It explained: "International law makes clear that fields generating about 90% of the UK's North Sea revenues will be in Scottish waters and the Scottish government will respect the well-established principles of international law."

Prof Paterson said he would not "greatly disagree" with the government's position.

However, he added: "The lion's share of resources are going to lie north of the border. On the other hand, I suppose what is an unknown quantity is the attitude of a future government of the remaining UK in the event we are dealing with independence.

"What sort of claim might they be minded to make, because clearly it is not going to be a matter of indifference?"

Voters in Scotland go to the polls on Thursday 18 September next year when they will be asked the yes/no question: "Should Scotland be an independent country?".

It is believed that there is between 30 and 40 years' worth of oil production left in the North Sea and the Scottish government predicted that oil production in Scottish waters could generate £57bn in tax revenue by 2018.

The UK's Office for Budget Responsibility (OBR) predicted oil revenue would drop from £6.7bn this year to £4.1bn by 2017-18.

The DHI conference, which takes place on Monday, will hear from Edinburgh University's Dr Andy Kerr and director of the David Hume Institute, Jeremy Peat.

Papers for the event have been written by Heriot Watt University's Prof Mark Schaffer and his colleagues; Prof Paterson and his Aberdeen University colleague, Prof Greg Gordon and Strathclyde University's Prof Kim Swales and his colleagues.

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