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

Key Recommendations

Stewardship

1. A road map must be established quickly for the future of the UKCS, ensuring the implementation of a clear strategy to maximise TVA generation for the nation.

2. Government and the new Regulator must be proactive in tackling the impediments to sustained investment, creating a positive sentiment for attracting investment and facilitating its enactment, implementation and embodiment.

3. Government must play a proactive role in developing the capability and competitiveness of the supply chain with advice and support from the new Regulator.

The Fiscal Regime

1. Government must seek to ensure international competitiveness, stability and predictability that is appropriate to the maturing environment of the UKCS and the competing investment environment globally.

2. The fiscal regime and policy approach must serve the purpose of creating and reinforcing the positive investment sentiment; any changes to the fiscal regime should be credible for the medium and long term, not only for short term purposes and set in light of achieving maximum TVA.

3. The simplification of the UKCS fiscal regime must be a key objective for government in the long-term. A number of specific and targeted improvements to the fiscal regime are recommended.

Regulation: Governance and Licensing

1. The over-arching strategy of MER must be implemented by the new Regulator, inclusive of the whole industry, and viewed in light of the ultimate goal of achieving maximum TVA.

2. The licensing regime must aim to achieve ambitious targets for MER as well as the higher aspiration of maximum TVA.

3. The new Regulator must have a formal right of consultation on fiscal or regulatory issue which could have an impact on investment or production in the UKCS.

4. Licence terms must be investigated as a means of ensuring greater certainty for operators investing in the UKCS, through incorporating a commitment to meaningful consultation with the Regulator and industry on any regulatory or fiscal changes and through formally placing MER and TVA as central to those considerations.

Regulation: Health, safety and Environment

1. The new Regulator in its stewardship role must in no way diminish the Health, Safety and Environmental regulation of the UKCS and must build on the aim of making the UKCS the safest place to explore for and produce oil and gas worldwide.

2. A single, strong, well-resourced and informed regulatory regime for health, safety and for environmental protection of the UKCS must be established with oversight of all relevant duties, in line with the EU directive.

3. The regulatory solution for health, safety and environmental protection, must be consistent with emergency response arrangements and the statutory requirements of the EU Offshore Safety Directive.

Decommissioning

1. Government and the new Regulator must work with operators to reduce decommissioning costs and avoid premature decommissioning of UKCS assets.

2. The new Regulator must have the authority to delay, refuse or amend a decommissioning application where assets have the ability to continue making an economic contribution.

3. Industry, supported by Government, must develop a clear strategy for the investment in the development of new technology and capability to ensure the UK supply chain is able to optimise the TVA from future expenditure on decommissioning.

4. Government must give further consideration to whether it may be appropriate for selected parts of UKCS oil and gas structures to be left in place and used for other environmentally advantageous purposes.

Technology and Innovation

1. Government must be the catalyst for investment by the indigenous supply chain through the establishment of R&D and innovation demonstration programmes where optimal national benefit can be obtained.

2. In support of TVA, Government must expand investment in R&D in oil and gas both directly and through centres of excellence that can facilitate collaboration between operators, the supply chain and Government in relation to critical technology needs.

3. Processes targeting improved technology testing are needed to reduce the "time to market" of new technologies.

4. Government and industry must work in partnership to improve the international reputation, competitiveness and export record of the indigenous supply chain.

Skills

1. As a priority, Government must use its levers to counter the impact of long-term industry under-investment in skills, and the impact on the inflation of wages.

2. An excellent skills base must be established both to meet immediate and long-term future needs.

3. The Regulator must act as a catalyst for future investment in skills development from both industry and Government, through stewardship, funding, licensing and regulation.

4. A stronger future regulatory mandate will seek demonstrable competence across both core and contracted staff for duty holding companies.

5. Industry in the UKCS must work with academia to establish excellent technical and graduate programmes with the goal of establishing a world class generation of new professionals.

Transition

1. In relation to any regulatory or fiscal regime change within the UKCS, the aspiration should be for predictability, visibility and continuity over the short-term, minimum disruption in the medium term and clarity for the long-term, with the aim of encouraging, not impeding, investment in the UKCS.

2. In the event of a Yes vote:

• Governments must facilitate a swift and transparent boundary determination to ensure certainty for industry;
• The new Regulator must operate within a single regulatory framework with dual government policies;
• Both Governments must adopt a collaborative approach with regards to the operation of the fiscal regime, with a view to maximising synergies, minimising compliance costs and a clear focus on providing clarity and certainty to the industry; and
• A single regulatory regime for Health, Safety and Emergency Response with dual government policy control is preferred, providing clarity and reducing transitional uncertainties in order to maintain continuity and to minimise the compliance costs for Government and industry.