AS DUSK falls, Grangemouth starts to glow. Cloaked in clouds of steam and lit by flares like giant candles, Scotland鈥檚 biggest oil refinery has a strange beauty. Situated roughly halfway between Edinburgh and Glasgow on the Firth of Forth, the 700-hectare petrochemical complex is a vital hub of UK oil production. Should Scotland vote for independence, it will be one of the new government鈥檚 key assets.
According to the industry, there are between of recoverable oil and gas left under the North Sea. About 42bn barrels have been extracted since production began there in 1967. Because prices have risen, 24bn barrels could be worth 拢1.5 trillion 鈥� more than the value of all the oil and gas extracted so far. 鈥淭hat gives us one of the best financial safety nets of any country in the world,鈥� the . If the UK鈥檚 Trident nuclear submarine base moves from the river Clyde after independence 鈥� as Scottish nationalists say it must 鈥� then prospecting off the west coast could begin too. It is currently banned in case it interferes with naval operations there.
There will be a few other tricky issues to resolve, like where the lines are drawn to demarcate which fields belong to an independent Scotland and which to the UK, and how the 拢35-拢50bn cost of decommissioning old oil rigs would be divided up.
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Ultimately the plan is to emulate Norway, and invest at least some of the created wealth for the future. Scotland鈥檚 first minister, Alex Salmond, has promised to put aside about 拢1bn a year, with the aim of generating a 拢30bn oil fund over a generation.
鈥�Alex Salmond promises to put aside about 拢1 billion of oil money a year, to create a 拢30 billion fund鈥�
Norway鈥檚 equivalent, the , has amassed over from oil and gas revenues since it was set up in 1990. It is the world鈥檚 largest sovereign wealth fund and owns 1.3 per cent of all the world鈥檚 listed companies.
According to Bj酶rn Vidar Ler酶en, an adviser to Norway鈥檚 industry body, Norwegian Oil and Gas Association, there was political consensus on the fund from the start. 鈥淭he oil belongs to the people and revenues from oil production shall be used to build a better society,鈥� he says. The Norwegian fund has a wide-ranging ethical policy that forbids investments in more than 60 companies involved in tobacco, arms, environmental or human rights abuses. Ironically, it is now reviewing whether to disinvest from fossil fuel companies because of the damage they do to the climate.
But there is one way in which Scotland would probably not be able to copy Norway: the Norwegian government鈥檚 67 per cent ownership of the oil company Statoil. 鈥淭o try to nationalise companies would not be politically possible either in Scotland or the UK,鈥� says , an oil specialist at legal firm Bond Dickinson in Aberdeen.
Perhaps the biggest conundrum, though, is the climate. According to WWF Scotland, burning 24bn barrels of oil and gas could put more then 10bn tonnes of carbon dioxide into the atmosphere 鈥� more than 120 times Scotland鈥檚 current annual emissions. 鈥淭he science is clear,鈥� says the environmental group鈥檚 director, . 鈥淭he planet certainly can鈥檛 afford to allow all the oil left in the North Sea to be burned.鈥�
Read more: 鈥�Four futures for an independent Scotland鈥�
This article appeared in print under the headline 鈥淥il and gas is at heart of Scots鈥� future wealth鈥�
