Ahead of Referendum, Confusion Over Scottish Oil

England can reasonably lay claim on part of “Scottish” oil and gas reserves in the North Sea.

Oil platform in the Cromarty Firth, Scotland, June 19, 2011
Oil platform in the Cromarty Firth, Scotland, June 19, 2011 (Dave Conner)

North Sea oil and gas will likely be one of the most divisive issues in the 2014 referendum on Scotland’s independence. Who does it belong to and do they own all of it?

The first North Sea oil came ashore in June 1975 and production is believed to have peaked in 1999 with more than forty billion barrels extracted so far. There are arguments about how much oil is left but historically high prices have made it feasible to drill for reserves that are harder to get with new and expensive technologies.

International convention says that a maritime border between two countries is an extension of the frontier on land. The land border between England and Scotland points upward on both the east and west coast. The maritime border used to follow this convention, putting a large portion of North Sea hydrocarbon reserves in English waters.

However, the maritime boundary was tweaked years ago, without consulting the English, to give the “Scottish sector” more of the oil. Which isn’t a problem as long as Scotland remains in the United Kingdom, since revenues flow to London and are then distributed across the country. But if Scotland decides to secede, the English might demand that the boundary is corrected.

Scottish nationalists argue that the region’s resources are subsidizing the rest of the kingdom, omitting mention of the revised maritime border. It could be argued that Scotland’s oil is really England’s, given to the former region to pacify nationalists there.

Confounding the issue is the Treasury which says that the oil really belongs to no one. The department in Whitehall argues that the continental shelf where the oil is located should be treated as a separate region. To what effect is something of a mystery since the area is obviously devoid of human population.

The Scottish National Party seems determined to fight all the same for what it sees as Scottish oil and gas. It has good reason to. Without the North Sea revenue, projected this fiscal year to be £33 billion, it’s far from certain whether the sparsely populated region could maintain its high living standards.