How Will Scottish Independence Impact Maritime Industry?

The long-awaited vote on the Scottish independence taking place today has seen international maritime players raise concern on the possible effects of the vote on the Scottish maritime industry.

According to Moore Stephens’s recently conducted survey of the international shipping community members on the impact of the vote, over half of respondents (55 % ) felt the vote could have a negative effect.

The results of the survey showed that, overall, the majority of those who predicted negative effect had an existing business relationship with Scotland, while those respondents with no existing business relationships with Scotland thought that a Yes vote would have a positive effect.

However, 74 % said they had no plan of action if Scotland voted to abandon the Union, indicating a high level of confidence in a No vote, according to the survey.

Cassie Forman, Moore Stephens director of Shipping and Offshore Maritime, said: “The shipping and offshore maritime industry is a vital part of the Scottish economy – it plays a critical role in the North Sea oil and gas industry, for example. It is an industry that will play a central role in the economic fortunes of Scotland whatever the outcome of the vote.”

The UK Chamber  of Shipping has raised various issues concerning shipping that should be addressed by Scotland, should the majority vote Yes.

According to the UK Chamber, obvious questions include establishment of a separate ship registry and MCA; taxation of shipping, followed by potential introduction of work permits and trade restrictions, seafarer training standards along with funding and provision of marine safety infrastructure (coastguards, lights, emergency tugs etc).

Having in mind that not too many ships are calling at Scottish ports, the Chamber President Ken MacLeod, was quoted by BBC as asking: “Are ships calling at a Scottish port going to have to pay four times the dues that they pay at the moment?”

The Scottish Government said that these issues would be addressed in a form of consultation with relevant stakeholders after the referendum.

The future of the oil and gas sector are also a key issue in the debate. Energy and research consultancy group Wood Mackenzie says the issues to be addressed in the event of a ‘Yes’ vote include fiscal (un)certainty, the offshore boundary and regulatory change.

Wood Mackenzie says that oil and gas companies will be closely following the result of the referendum, and the potential issues which might arise in the event of a ‘Yes’ vote, but of more pressing concern to the industry is the underperformance of exploration and production on the UK Continental Shelf (UKCS).

“Fiscal uncertainty is a chief concern of oil and gas companies in the UKCS and there is an ongoing review of the industry’s fiscal terms.  Regardless of which government is in charge of the industry, companies will seek stability and simplicity around existing fiscal terms as well as tax incentives for harder to produce reserves.  Industry engagement will be paramount to maximising value for both government and companies,” Wood Mackenzie said.

“We estimate that by 2030 nearly US$9 billion of tax relief will be claimed in respect of decommissioning spend on Scottish fields. This relief has been guaranteed through the Decommissioning Relief Deeds (DRDs) that exist between licence holders and the UK Government. The Scottish Government has stated that it will provide similar contractual certainty on decommissioning tax relief in the event of independence.”

In addition, Wood Mackenzie explained that a border for oil and gas activities would need to be negotiated, as prolonged dispute could cause uncertainty and negatively impact the investment plans of companies active in the disputed area.

Wood Mackenzie forecasts that the bulk of UK oil and gas reserves lie in Scottish waters, and forecasts that an independent Scotland would control the vast majority of production as well as the most prospective acreage.

In terms of remaining reserves, Wood Mackenzie estimates that circa 15.3 billion barrels of oil equivalent remain in the UK.  This comprises reserves which are being produced, yet to be produced and yet to be found:  the Scottish portion of commercial reserves is 84%.

Over 2,600 polls have opened across Scotland since early this morning and a high turnout is expected from over 4.2 million registered voters. The results are expected early Friday morning.