Scotland's Independent Expert Commission on Oil and Gas: report

Annex A

Remit of Expert Commission

Context

Building upon the approach set out in the Scottish Government's Oil and Gas strategy, three overarching principles have been identified that Scottish Ministers believe should underpin the oil and gas fiscal regime under Independence:

• The fiscal regime must support and incentivise production.
• There should be long-term stability and certainty in the fiscal and regulatory regimes, including the commitment to formal consultation prior to future reforms, and specific clarity on the fiscal treatment of decommissioning costs.
• There are efficient fiscal incentives to maximise economic recovery rates.

In addition, it is important that any policy framework in an Independent Scotland ensures that:

• appropriate incentives are in place to support exploration and field development; and
• critical infrastructure is maintained and developed to maximise recovery.

The Oil and Gas Expert Commission's work should build on these principles and the overarching framework that has been set out in the report "Maximising Scotland's return from oil and gas".

Specific Questions

i The Oil and Gas Expert Commission will consider specific proposals for providing long-term fiscal stability and predictability for the oil and gas industry in an independent Scotland.

ii The Oil and Gas Expert Commission will consider any appropriate amendments to improve the fiscal regime. This should be consistent with the Scottish Government's objective of delivering a tax regime that supports production. As part of this, the Commission will consider evidence on other types of marginal projects in Scottish waters that might require additional fiscal support in the future.

iii The Oil and Gas Expert Commission will consider options to increase competition and reduce entry barriers in the UKCS, including options to support exploration activity by both new entrants and established operators.

iv The Oil and Gas Expert Commission will also consider specific arrangements for the North Sea licensing and regulatory regime in an Independent Scotland and, in consultation with the industry, examine options available to enhance the existing regime.

v The Expert Commission, in consultation with the industry and other stakeholders, will examine how the fiscal framework in an independent Scotland will provide certainty for operators in regards to decommissioning.

vi The Expert Commission will consider potential implications arising from the transition to separate Scottish and rUK jurisdictions for taxation, licencing and the offshore regulatory regime, to ensure that it will not have any adverse impact on the sector.

Membership

Chair: Melfort Campbell OBE Chairman of Imes Group and co-chair of the Oil and Gas Industry Leadership Group. Melfort also sits on the Scottish Energy Advisory Board and is a board member of Scottish Enterprise. Melfort has 35 years' experience in the high integrity engineering business, over 30 years' experience in the oil industry, as well as defence, nuclear power and processing industry experience, and is a former commissioner of the Tax Reform Commission.

Professor Kemp (Professor of Petroleum Economics, and Director of the Aberdeen Centre for Research in Energy Economics and Finance at the University of Aberdeen) has brought a wealth of experience and expertise not only in relation to the fiscal framework but more widely in relation to his knowledge of the future challenges and opportunities for the UKCS.

Professor Marcella (Dean of Aberdeen Business School, Robert Gordon University) has to date conducted extensive research into health and safety management in the oil and gas industry internationally, and is continuing to conduct and commission research on the lessons needing to be learned for the future on these vital matters for the industry.

Dick Winchester sits on the Scottish Energy Advisory Board and has 40 years of experience in the offshore oil and gas industry - 15 years in subsea operations and engineering, 25 years' experience running technology businesses and in developing and managing R&D programmes. Currently Managing Director of Pipistrelle Ltd, he brought additional industry experience and knowledge to the breadth of the remit of the Commission. Dick also writes a column on a range of energy issues for the Aberdeen Press & Journal "Energy" supplement."