Scottish independence vote could put Taqa to the test

Supporters of the ‘No’ campaign gather in Glasgow. The referendum will take place on September 18, when Scotland will vote whether or not to end the 307-year-old union with the rest of the United Kingdom. Paul Hackett / ReutersShow less

Aberdeen has much at stake when Scotland votes on independence this week – and so does Abu Dhabi.

Abu Dhabi National Energy Company, known as Taqa, has significant exposure to the North Sea, which some top oil executives have warned could be adversely affected if Scotland decides to become an independent country when it votes in the referendum on Thursday.

All of Taqa’s North Sea assets are located in what would be Scotland’s sector of the North Sea, and the company’s UK head office is currently located in the Scottish city of Aberdeen.

Taqa, also known as Abu Dhabi National Energy Company, operates five oil and gas production platforms – Cormorant Alpha, Eider, North Cormorant, Tern Alpha and Harding, which together with its stakes in fields operated by others produced 61,500 barrels of oil equivalent per day during the first half of this year.

Taqa also operates the important Brent pipeline, which connects the Cormorant Alpha platform to the BP-operated Sullom Voe Terminal and carries about 90,000 barrels per day of oil, or about 10 per cent of total UK oil production.

Other Abu Dhabi companies such as International Petroleum Investment Company have a relatively small exposure to the North Sea through its 24.9 per cent stake in OMV, while Mubadala has no assets there.

Oil executives have voiced fears that an independent Scotland could require the setting up of a new regulatory and taxation regime, which would be disruptive for the industry.

Last week, the BP chief executive Bob Dudley warned that “fiscal stability and certainty [and] maintaining existing infrastructure and capacity” were necessary to develop the UK North Sea’s mature oil and gas assets, a sentiment backed by Shell’s chief Ben van Beurden.

Both men came out in support of the Scottish oil services executive Sir Ian Wood, who criticised as “overly optimistic” and “an insult to the Scottish people” forecasts of potential future North Sea oil discoveries by the pro-independence side.

The future of North Sea oil has been a highly contentious part of the independence debate as it would make up a significant portion of an independent Scotland's tax base and continue to be important to the economy as a whole.

A report by the pro-independent side estimated that there may be another 21 billion barrels of oil yet to be discovered in Scotland’s North Sea sector from unconventional geological formations, such as shale. Some other experts, including professor Alex Kemp of Aberdeen University, have also backed optimistic predictions.

But this was disputed by the Shell chief executive. "As existing infrastructure gets older and output falls, costs will go up and tax receipts will come down," said Mr van Beurden. "Much of the UK North Sea's remaining oil and gas – which is yet to be discovered and developed – is in isolated or hard-to-reach areas, which are potentially uneconomic without sharing of existing infrastructure and improved tax incentives."

Taqa has declined to comment on the potential effects of the vote but has referred inquiries to UK Oil & Gas, and industry trade body, which issued its own meticulously impartial report earlier this year, in which it emphasised the need for cooperation between Scotland and the central government in London on regulation and taxation issues.

Whatever the disagreements about the future development of the North Sea, the Scottish oil industry and the regulatory regime in London have cooperated over the decades since oil was first discovered there in the 1960s. “The impending referendum has made no perceptible difference to such collaboration,” the UK Oil & Gas report concluded.

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