As a key economic driver for more than 40 years, the North Sea was always going to be more than a bit-part player in the upcoming independence referendum.
The oil that flows from beneath the seabed has been a guaranteed source of cash for successive UK governments, and it comes as no surprise the SNP have their eye on that prize in the event of a Yes vote come September.
And so it was that both First Minister Alex Salmond and Chief Secretary to the Treasury Danny Alexander both duly turned up at industry body Oil & Gas UK’s annual conference in Aberdeen.
The First Minister looked to woo industry leaders with a pledge to part-fund a new industry regulator called for by Sir Ian Wood in his recent review.
The Coalition’s standard bearer arrived in the north east with a promise the regulator would be based in the Granite City, as news broke of UK Government consents for Premier Oil’s £1.5 billion Catcher field.
As much as the political to-ing and fro-ing provided an interesting backdrop to proceedings, I found my attention drawn instead to the stark warning issued by Oil & Gas UK’s chief executive Malcolm Webb.
In an unusually strong-worded statement, Mr Webb whose organisation represents more than 450 oil and gas producers and associated contractor firms said anyone who thought the North Sea was operating on a competitive par with other major global oil regions was simply kidding themselves.
He said that while capital expenditure was currently at an all-time high, costs had increased, productivity had slumped and exploration was in crisis.
Without swift and fundamental change, Mr Webb contended there was a real risk that potentially viable oil and gas reserves would go untapped, jobs would be lost and tax receipts left uncollected.
However, I’d suggest the most concerning point of all and one that most certainly should be heeded in the corridors of power in Edinburgh and Westminster was his warning that security of supply could not be guaranteed without immediate reform.
“We simply cannot go on like this,” a rather desperate sounding Mr Webb told delegates.
On the back of the Wood Review, the purpose of which was to draw up a blueprint to maximise recovery and the economic potential of the UKCS, Mr Webb’s intervention is timely and should not be ignored.
I hope Messrs Salmond and Alexander et al did more than talking on their visit to the north east. For the sake of the oil and gas industry’s long-term health, I hope they came to listen, too.
* The EY Scottish Item Club has moved to upgrade its 2014 forecast for the Scottish economy.
The think tank’s 0.7% uprating of its December GDP prediction is yet another welcome indication that the economy is finally going in the right direction.
The dominant services sector continues to improve, and there are also good signs that Scotland’s manufacturers are finally waking up following their long slumber.
There is still a huge amount of ground to be made up, but we can all be grateful that the dark days of the recession now finally seem to be behind us.
* There’s no time to dilly dally.
The closing date for this year’s Courier Business Awards will soon be upon us, so get your entries in now.
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