Scotland’s 2014 Referendum: Possible Implications for the UK’s domestic production in the North Sea?

by Elpida Theodoridou. Originally published on 2014/05/14

In September 2014 a referendum is anticipated to take place in Scotland that will decide whether Scotland will remain part of the United Kingdom as it is or will become an independent country instead. If Scotland decides to become an independent state and no longer be part of the United Kingdom, substantial changes could potentially take place in several areas, such as politics, economic or international relations. With the issue of energy security being a crucial one for an independent state, what kind of impact can this potential pursuit of independence bring?

Scotland as part of the United Kingdom

Scotland’s long history extends to even before uniting with England. During the Early Middle Ages Scotland emerged as an independent state with multilingual and multi-cultural characteristics. The region has been involved in a series of wars against England especially during the 13th and 14th centuries (BBC, 2014). In 1707, under the Acts of Union, Scotland and Wales united with England forming the Great Britain (Scotland.org, 2014). In 1999, after a referendum held in 1997 and under the Scotland Act of1998 a parliament was recreated for Scotland. Sharing a common border, England and Scotland have developed strong ties on many levels: economic, political, cultural and others. The geopolitical importance of Scotland to England is evident. The North Sea, which geographically is closer to Scotland than England, is an area filled with offshore oil and gas extraction sites, including English companies among those who are active in the region. The area is of crucial geopolitical importance as the domestic production reinforces the country’s energy security.

Scotland’s Current Status Quo

Through the years especially during the 20th century, Scotland has managed to acquire more independence from its counterpart in the Union. Scotland is recognized as a self-governed country while the Scottish Government and the Scottish Parliament hold the executive and the legislative power, according to the Scottish Act 1998. Yet it is the United Kingdom Parliament that still holds the power over important matters, including defence, international relations and energy security. The issue of independence and controlling their own resources has always been an issue for the Scottish. In the 1970s, after the beginning of the North Sea oil production, the slogan “It’s Scotland’s oil” introduced the Scottish National party. Eventually, the Edinburgh Agreement signed in 2012 was that legislative act that paved the way for Scottish independence. “In March 2013, it was announced that the independence referendum will take place on Thursday, September 18, 2014. The question to be asked is: Should Scotland be an independent country. Yes or No.”(Scotland.org, 2014). The referendum is anticipated to draw the attention not only in the United Kingdom but also in Europe, regardless of the outcome.

The North Sea area is undoubtedly an important regional pivot. According to a report published by the Scottish Government in March 2012, “27% of the 189,000 energy jobs in Great Britain are located in Scotland” (Scotland.gov.uk). Ever since the beginning of the exploitation of the region’s resources in the 1970s, the North Sea area is a crucial region for the Britain given that a significant percentage of the country’s domestic oil needs are supplied by the operation sites set in the North Sea (67% of the UK’s oil demand needs in 2012 were supplied by the North Sea production sites). Based on the latest report published by the Scottish Government in 2014, “the total number of energy enterprises in Scotland increased from 1,160 in 2008 to 3,085 in 2013 (an increase of 166%)”(Scotland.gov.uk). It is important to keep in mind that a significant and increasing share of the energy sectors involves the renewable energy industry.

Possible Implications?

The discussion regarding Scotland’s independence has already begun to heat up, as the referendum date is approaching. Alex Salmond, Scotland’s First Minister is already preparing his guns for the upcoming fight. His public statements with regards to the referendum are becoming more frequent. Salmond is making efforts to reassure Europe that Scotland will remain part of the European Union while dropping the ball into Cameron’s court by arguing that the latter’s statements over the UK vote in 2017 (where UK will decide if it will remain an EU member or not) are the ones that should raise the EU’s concern (Guardian, 2014). On the other hand, the UK Prime Minister, David Cameron, urges Scotland to vote “No” -since the loss would be more significant than the potential benefits- for both sides. During a speech he gave in February 2014, Cameron exemplified the importance of staying united. As he stated both sides will gain when united while they will lose if they part. He named four compelling reasons why Scotland’s presence within the United Kingdom makes the country stronger: intercultural relations, economic ties, international position and the UK’s cultural impact as a whole (gov.uk, 2014). These areas could potentially be affected in the case where Scotland votes to become an independent state.

Yet, there is an important issue already addressed. The struggle either for independence or maintaining the current situation is mainly linked to the pursuit of energy security. With the North Sea oil supplying 67% of the UK’s oil demand in 2012, a possible Scottish independence could cause major trouble for Downing Street. During separate meetings held in Aberdeen (the oil capital of the country) last February by the UK and Scottish cabinets, the issue of the North Sea’s oil was discussed. In 2014, Cameron continues to argue that “the oil and gas industries would be best served by Scotland remaining in the UK” while Salmond is insisting that “independence would bring enormous benefits to the sector” (BBC, 2014).

Losing the dominance over the source that supplies almost half of Britain’s energy demand would definitely cause disruption. In the case where an independent Scotland decides to pursue its energy resources, the rest of Britain will have to turn towards the alternatives. Shale gas has already been brought to the table. Yet, the implications for the energy security sector can create the domino effect of consequences.

There have already been rumors that in case Scotland becomes an independent state, Cameron will submit his resignation, leading to unrest (The Independent, 2014). Downing Street refused to make any comment regarding the issue. The consequences of such an action are difficult to estimate. Would the resignation cause imbalance and nervousness in the political, business and social sphere or would it be perceived as a chance for a new beginning? Would Scotland’s dream of energy security become Britain’s nightmare? It is only the referendum in September 2014 that will give some answers.

References

– BBC, 2014. In Search of Scotland.

– Scotland. The Offical Gateway to Scotland, 2014.

– Energy Statistics Database, 2012. Energy in Scotland: a Coompendium of Scottish Energy Statistics and Information.

– The Scottish Government, 2014. Energy in Scotland 2014. A Coompendium of Scottish Energy Statistics and Information.

– Ian Traynor. Alex Salmond insists independent Scotland would remain in EU. The Guardian, 2014.

– Gov.uk, 2014. The importance of Scotland to the UK: David Cameron’s speech

– BBC, 2014. Scottish independence: Cameron and Salmond focus on energy

– Jane Merrick and John Rentoul. Scottish independence: No 10 silent on David Cameron’s future if Yes vote wins the day. The Independent, 2014.