What if the 2014 referendum rejects independence?
Opinion polling predicts a ‘no’ at the referendum but indicates strong interest in further devolution from Westminster to Holyrood.[i] The Scotland Act 2012[ii] will soon devolve further powers (and taxation rights) whilst ‘Devo Max’ is a commonly-discussed concept (although hitherto undefined) understood to mean a major transfer in powers to Holyrood just short of a full independence arrangement.[iii]
What might happen to oil & gas?
Should devolution continue, oil & gas may well come under Holyrood’s control at some point in the future. Joint management (Westminster-Holyrood) is an option although global experience suggests such arrangements can lead to tensions; in Canada, development of Newfoundland’s offshore sector has been affected by provincial government disputes (with the federal government and multi-national oil companies) over revenues and local opportunities.[iv]
The UKCS presently forms just 2% of the UK economy. Furthermore, whilst the Scottish Government has identified some £31-57 billion of future tax revenue,[v] such values are considered susceptible to an oil price decline.[vi] As sector value diminishes, it could resemble earlier UK heavy industries (e.g. shipbuilding) which became dependent upon state aid as decline set in. Upon full devolution, Holyrood could consider providing support given oil’s on-going importance in the Scottish context. As a parallel, via the recently-formed Nordsǿfonden (“the Danish State’s oil and gas company”),[vii] Denmark acquired 20% equity in the Maersk-operated Dansk Undergrunds Consortium (DUC) sole concession[viii] to support its maturing sector.
UPDATE (December 2014): Refer to ‘1. Basics’: the post-referendum Smith Commission resulted in an agreement to transfer further powers and taxation to Holyrood; oil and gas remained largely reserved to Westminster, however.