North sea oil and gas revenues: First Minister letter

21 October

Dear Andy,

I am writing following the UK Government’s decision to grant consent for the Jackdaw gas field in the North Sea, in relation to the opportunity this creates to secure a lasting legacy from Scotland's remaining offshore oil and gas resources.

As you are aware, my view is that decisions on matters of such importance for Scotland's economy, communities and energy future should be made here in Scotland. That is why, in May, my Ministers wrote to their UK counterparts formally requesting the devolution of energy powers.

Given that the key powers relating to offshore oil and gas licensing, consenting and the fiscal regime remain reserved to the UK Government, it has been for your Secretary of State and regulators to be assured that Jackdaw has met the necessary statutory requirements around climate compatibility. Full consideration should also have been given to matters of energy security.

I believe that the consent for Jackdaw must also now prompt a broader discussion about how long-term public benefit can be secured from the revenues which remain to be generated from the revenues that flow from North Sea oil and gas. I am sure that you will agree that is essential that maximum public benefit be derived from finite natural resources, ensuring that the wealth they generate supports economic transformation for the long term.

Successive UK Governments have failed to establish a dedicated sovereign wealth fund using North Sea oil and gas revenues. This has meant that the people of Scotland have not fully benefited from the wealth generated by our vast energy resources. The UK is one of the only states to discover oil and gas but not build a fund to deliver long-term benefit from it. Whilst I recognise that the North Sea basin is now geologically mature, it is also the case that we will continue to use its oil and gas for years and decades to come. Newly consented fields, such as Jackdaw, will generate substantial additional revenues over this period.

International examples clearly demonstrate that it is possible to convert finite natural resources into enduring public benefit. Countries of varying sizes and levels of economic development, alongside energy-producing regions such as Alberta, Alaska and Texas, have all established funds based on such revenues. Indeed, the reserved Energy Profits Levy has itself already raised £13 billion since its introduction in 2022, demonstrating the significant value that continues to be generated from North Sea oil and gas resources.

In this context, I welcome the announcement today from the Chancellor of your government’s intention to establish a new North Sea Energy Wealth Fund. I and my Ministers would welcome further engagement with UK Government on this as a matter of priority.

I am keen to understand when the new Fund will start and why the “initial £2 billion injection of funding” referred to by the Chancellor seems to represent only around half of last year’s North Sea revenues, how the Fund will be managed and most importantly, to what purpose it will be used. My clear view is that, given the distribution of North Sea oil and gas resources, any such Fund should be prioritised for offshore renewable opportunities and be ring-fenced to be focussed on the North East of Scotland.

I look forward to your response and to the opportunity to discuss further.


John Swinney MSP