Exclusively For Offshore Post: Declan is an internationally recognised journalist of more than two decades, having worked for the BBC and ABC News, focusing on all things business and global economics.

Declan Curry

Independence For Shetland And Her Oil?

Published at 01:46PM - 27/09/16

If Scotland breaks away from the United Kingdom because of Brexit, the newly-independent nation will not be able to assume that the North Sea will pay its bills.

The territory closest to the oil fields, Shetland, is no great fan of Edinburgh or Brussels and could easily go its own way – taking control of much of the UK Continental Shelf with it.

An Independence Vote For Shetland?

The vote for Britain to leave the European Union was supposed to trigger another election – a fresh independence referendum in Scotland. That would give its more Euro-friendly people the option to break off from the UK so they can remain in – or rejoin – the EU. Oil is one of the reasons that hasn’t happened yet.

Most Scottish voters wanted to stay in the EU; 62% voted to Remain, 38% voted to Leave. In February, before the Brexit vote, Scotland’s First Minister Nicola Sturgeon said there would “almost certainly” be a second independence vote if Scotland voted to stay in Europe and the UK voted to leave.

Scotland's First Minister Nicola Sturgeon
Scotland’s First Minister Nicola Sturgeon

As I noted in an earlier column for Offshore Post – the leader of the Scottish National Party‘s group in the UK’s national parliament said after the Brexit vote that Scotland would not be taken out of the EU, and if that required a second referendum in Scotland on independence, “so be it”.

SNP Dithering

So – when can we expect this refreshed plebiscite? There are mixed signals from Holyrood. One SNP member of the Scottish Parliament told a conference in Edinburgh recently that independence “is on the back burner”; Ms Sturgeon is concentrating on getting the best deal for Scotland from the UK’s negotiations with the EU.

Other sources tell the media that the SNP is preparing policy blueprints to answer the difficult questions that cost it victory in the last referendum and to secure independence when the poll is re-run.

There are many reasons for this dithering. Uncertainty over the UK’s future access to the European Single Market is one; another is the power-struggle between Ms Sturgeon and UK Prime Minister Theresa May over who has the right to call a new Scottish referendum.

Oil Price Collapse

But the state of the oil market has also calmed the SNP’s urgency. At the time of the 2014 referendum, oil was around $100 a barrel and Ms Sturgeon talked confidently of a “second oil boom”. Since then, the collapse in the oil price has shredded Scotland’s financial position.

The SNP says it is not reliant on income from the North Sea to keep an independent Scotland solvent, but previous Scottish Government forecasts had assumed the oil industry would cough up as much as 15% of the nation’s taxes. Now, in some months, the North Sea costs more in tax breaks than it earns in petroleum revenues.

How Much Oil Is Scottish?

And how much of that oil and gas would an independent Scottish Government be able to claim as its own? The key cog in the Scottish offshore oil industry is the Shetland Islands. It’s estimated that around 20 percent of the oil extracted from the North Sea in the last four decades has been piped though Shetland’s Sullum Voe terminal.

Shetland Oil Map
Shetland Oil Map
Click To Enlarge

While other parts of the North Sea are winding down and heading towards decommissioning, almost one-fifth of the UK’s remaining oil and gas reserves are thought to lie to the west of Shetland.

The Islands terminals will play a key part in getting that oil and gas to market. In May, Total launched its new £3.5bn Shetland Gas Plant to draw in gas from the Laggan-Tormore fields. Eventually the plant is expected to supply the UK with 8 percent of its daily gas requirements.

Shetland’s Oil – The SNP’s Problem

Shetland’s importance for energy and wealth may create a small problem for the SNP’s referendum plans.

Shetland Islanders don’t like the idea of Scottish independence very much. In the 2014 independence referendum Shetland voted more strongly to stay in the UK. 64% voted against independence on the Shetland Islands; by comparison the vote across Scotland as a whole was 55%.

Shetland Harbour Workers
Shetland Port Workers

In the 2015 Westminster General Election that saw the SNP seize almost all of Scotland, only three constituencies resisted the nationalist tide; one of them was the seat representing Shetland, which re-elected a Liberal Democrat MP. The Shetland seat in this year’s Scottish Parliament elections also – against some predictions – remained in the hands of a long-standing Liberal Democrat candidate. It is a nut the SNP has been unable to crack.

The idea of breaking off from the UK is already unpopular on Shetland; to do so to stay in Europe may turn out to be doubly unattractive. Many Shetland Islanders don’t like the EU much either. The local fishing fleet’s battle for survival ensures the Islands are more Euro-sceptic than the rest of Scotland. In Shetland, the vote to leave the EU was 44%; in the rest of Scotland it was only 38%.

Independent Scotland – Independent Shetland

Shetland’s MP and MSP have both suggested that if Scotland did go it alone, Shetland would consider becoming a self-governing territory like the Isle of Man. The Islanders are as much Viking as they are Scottish. Shetland was once ruled by Norway and did not become part of Scotland until the late 15th Century.

The islands are closer to Bergen in Norway than they are to the Scottish Parliament in Edinburgh. The problem for Holyrood is – without Shetland, does Scotland have any claim to the riches under the northern North Sea?

Scotland could become an energy desert, stuck between an oil-rich, autonomous Shetland and a gas-rich England enjoying fracking and the southern North Sea.

17 thoughts on “Independence For Shetland And Her Oil?

Leave your thoughts about this article