Riches and rags in Scotland’s oil capital

Report for RFI English broadcast on 17th September 2014. As Scotland decides whether to secede from Great Britain, one of the key issues has been the management of vast oil and gas reserves in the North Sea. The industry is crucial to Scotland and is said to be worth around 44 billion euros to the British economy. But supporters for independence say Britain has failed to reinvest oil and gas revenue in Scotland. Report from Aberdeen, Scotland’s oil hub.

Click here to listen to the report on the RFI English website.

Transcript:

Ship horn sounds at Aberdeen Harbour.

Aberdeen is often known as the oil capital of Europe; the gateway to the European Union’s largest oil and gas reserves.

Everyday, supply vessels leave the city’s tiny harbour for oil platforms hundreds of kilometres away in the North Sea.

Alex Russell is a professor of petroleum accounting at Aberdeen’s Robert Gordon University.

Alex Russell, Business School, Robert Gordon University: “For the past 40 years the oil and gas industry has really been the main element in the economy of the United Kingdom and of Scotland. Over that period we’ve produced about 42 billion barrels of oil.”

The industry contributed six billion euros in taxes to Britain last financial year.

But production has been falling since its peak in 1999, and how much oil remains has been the focus of the referendum debate.

Independence supporters point to studies showing there could be up to 24 billion barrels left…enough to make Scotland one of the richest countries in Europe.

But a leading oil magnate, Ian Wood, warns only about 16 billion barrels remain.

In any case, Professor Russell says Britain has mishandled the oil money.

Alex Russell: “Perhaps one of the biggest disappointments of what has happened in the past is the UK exchequer, the UK government, haven’t invested the tax revenues from the North Sea oil. They’ve used it for other purposes. And basically it’s gone. And that’s very unfortunate.”

Jenny Taylor, founder, Somebody Cares: “We have a wee food bank over here…”

Just west of the city centre are some of Aberdeen’s poorest areas, where up to a third of children live in poverty.

Jenny Taylor runs the charity Somebody Cares.

Jenny Taylor: “Our stores are a little depleted at the moment because we’ve been quite busy this week with food.”

Kalvin Ng: “How many people come to you for help with food?”

Jenny Taylor: “We can have up to 23 people a day.”

Her husband, Brian, says the oil wealth has not been evenly distributed.

Brian Taylor, Somebody Cares: “In Aberdeen, if you’re connected with the oil industry, you will do well. If you’re not connected to the oil industry, you may struggle, and that’s been what’s been proved…Aberdeen is becoming the second most expensive city for rents, and so a lot of these people don’t even have enough money to pay the rent, far less put food on the table.”

Jenny Taylor: “We’ve had oil workers working here, and we send them out in the vans to help with the delivery to our clients, and they are shocked at what they see. They can’t believe that Aberdeen has poverty like when they go out and see these situations.”

The Scottish National Party has promised to invest oil and gas revenues into a sovereign wealth fund if Scotland votes for independence.

Alex Russell says it could be modelled on Norway’s, the world’s largest wealth fund worth nearly 700 billion euros.

Alex Russell: “All you have to do is look at what happened in Norway. A country of comparable size in population, less than Scotland even, but very, very wealthy because they’ve utilised the oil funds in a much more strategic manner; investing it for the future rather than spending it immediately…Scotland will certainly manage its own affairs better from a Scottish perspective.”

Whatever happens after the referendum, the debate about how the oil riches should be handled is unlikely to go away.

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