BP Backs U.K. Union as Oil Chiefs Wade Into Independence DebateWill Kennedy and Nidaa Bakhsh
The chief executive officers of the largest U.K. oil producers waded into the Scottish referendum campaign today, calling for Britain to remain intact and urging caution on the size of the North Sea’s remaining reserves.
BP Plc’s Bob Dudley and Royal Dutch Shell Plc’s Ben van Beurden put out statements saying they backed an estimate of oil reserves by Ian Wood, the former chairman of oil engineer John Wood Group Plc, who published a report this year on the future of the industry. The pro-Independence side has endorsed higher estimates of potential North Sea production.
Dudley and van Beurden, whose companies led the development of the North Sea oil industry in the 1970s and 80s, have said several times they’d prefer to operate within the existing U.K. The potential of the region’s remaining oil reserves, most of which would go to Scotland if the union ends, has long been a focus of the independence debate.
“BP has been in the U.K. North Sea for 50 years and we hope to operate here for many years to come,” Dudley said. “BP believes that the future prospects for the North Sea are best served by maintaining the existing capacity and integrity of the United Kingdom.”
As opinion polls show the Sept. 18 vote is too close to call, separatist campaigners led by First Minister Alex Salmond argue that oil wealth will underpin the economy of an independent Scotland.
Ian Wood said today at a conference that the Scottish people were being “misled” by highly inaccurate forecasts.
His central assumption is 15 billion to 16.5 billion barrels may be retrieved from the North Sea mainly because of aging infrastructure and increasing costs. Two Aberdeen-based academics Alex Russell and Peter Strachan have said that technological advances made that forecast an understatement.
“Ian Wood is right in his technical assessment that the amount of remaining oil and gas that can be profitably extracted from the U.K. North Sea is a function of price and cost,” Shell’s van Beurden said in the statement. “As existing infrastructure gets older and output falls, costs will go up and tax receipts will come down.”
While Shell is based in The Hague, it has its primary listing in London, where a 156 billion-pound ($252 billion) market capitalization makes it the U.K.’s most valuable company. BP, once a state-run company, is Britain’s second-largest oil producer.
“The province is now mature and I believe Sir Ian Wood correctly assesses its future potential,” Dudley said. “It is important our plans are based on a realistic view of the North Sea’s future potential.”