Scottish independence: Rival North Sea oil visions set out

The equivalent of more than 40 billion barrels of oil have already been produced from the UK Continental Shelf, but production is declining

The Scottish and UK governments have set out competing visions for the future of North Sea oil and gas.

Scottish First Minister Alex Salmond called for a Norwegian-style approach, under independence.

Prime Minister David Cameron said reserves could be better managed with Scotland as part of the Union.

Both the Scottish and UK government cabinets met separately in the Aberdeen area, to argue the case for their proposals.

Prime Minister David Cameron visited a North Sea oil installation ahead of the UK government cabinet meeting

Scottish First Minister Alex Salmond led a meeting of his cabinet, also in the Aberdeen area

The two events came as Westminster ministers said they would fast-track plans to get the most out of remaining UK offshore oil and gas, in the wake of an industry review which included calls to set up a new regulator.

The future of North Sea oil and gas has been a major campaign battleground ahead of the 18 September Scottish independence referendum.

Mr Salmond has outlined plans to earmark about a tenth of oil and gas tax revenues - about £1bn a year - for an oil fund similar to the one operated in Norway.

This, he said, could create a £30bn sovereign wealth pot over a generation.

The first minister, who held a meeting of his cabinet in Portlethen, welcomed the prospect of a new regulator for the oil industry, but rejected Prime Minister David Cameron's claim that the "broad shoulders" of the UK could better support the North Sea oil and gas industry.

He said an independent Scotland would "run oil and gas a great deal better" than Westminster had, and said Scotland needed "the Norwegian approach to things as opposed to the Westminster approach".

Asked whether an independent Scotland could withstand volatility in the oil market, Mr Salmond told the BBC: "Of course people in Scotland, in Aberdeen in particular, just look across to Norway where a country smaller than Scotland, more oil and gas dependent than Scotland, has handled its resources infinitely better than Westminster.

"It hasn't been so much the broad shoulders of Westminster as the vast cavern in the Treasury over the last 40 years where they've accumulated massive oil and gas revenues from Scotland.

"The reason they want to hang on to Scotland's resources is that they've done so well out of them over the last 40 years. I think the next 40 years should be Scotland's turn."

The future of North Sea oil and gas has been a major campaign battleground ahead of the independence referendum

The Scottish government's Fiscal Commission, in October 2013, said there was "clear merit" in an independent Scotland setting up two oil funds - a short-term "stabilisation" fund to buffer the effects of volatility in the oil market, and a long-term savings fund to ensure future generations benefited from the wealth.

Norway's oil fund was created by the Norwegian government in 1990 in a bid to protect the country from oil market fluctuations, and is now worth around £500bn.

The fund owns around 1% of all the world's stocks and shares and is being saved for future generations, though the Norwegian government can choose to spend 4% of the fund each year.

The review produced for the UK government by businessman Sir Ian Wood, made several recommendations, including revitalising exploration to ensure recoverable oil and gas resources in the UK are fully explored and exploited.

Westminster ministers said the changes would produce an extra three to four billion more barrels of oil.

The Prime Minister visited a North Sea oil installation ahead of his cabinet meeting, which was held five miles away from the location of the Scottish government session.

Mr Cameron told the BBC: "What we see with the North Sea is a great success story for the United Kingdom - and now the oil and gas is getting harder to recover it is more important than ever that the North Sea oil and gas industry has the backing of the whole of the United Kingdom.

"I think this family of nations is better off together. We want you to stay. My argument is one that is unremittingly positive about the success of this family of nations.

"It is worth listening to people like Bob Dudley from BP who talk positively about the strengths the UK brings to the North Sea oil industry."

The first North Sea oil came ashore in June 1975 and production is thought to have peaked in 1999, with more than 40 billion barrels extracted so far.

Although the oil and gas are now tougher to extract, the reserves are substantial - between 15 billion and 24 billion barrels of oil equivalent - meaning possibly another 30 to 40 years of production. And there could be new discoveries such as the fields west of Shetland.

But concerns over falling production led the UK government to ask Sir Ian to review the offshore industry.

He said the UK government's Department of Energy and Climate Change (DECC) was "significantly underresourced and far too thinly spread" to effectively manage the increasingly complex business and operating environment.

During his visit to Scotland, the Prime Minister was also asked, in the event of a Yes vote in the referendum, if he would support an independent Scotland's application to join the EU.

Mr Cameron said: "Absolutely, but it's not my choice how EU applications work."

The Scottish cabinet usually meets in Edinburgh, but regularly holds sessions in towns and cities across Scotland, especially in the summer months.

Mr Cameron's predecessor as prime minister, Gordon Brown, held a meeting of the UK cabinet in Glasgow in 2009.

Before that, the UK cabinet had last met in Scotland in 1921.