John Smith's British National Oil Corporation (BNOC)

[TonyGosling]

John Smith's British National Oil Corporation (BNOC)
15th January 2014
Why we should lament loss of Britain's answer to Statoil
https://www.heraldscotland.com/opinion/13140540.why-we-should-lament-l oss-of-britains-answer-to-statoil/

I IMAGINE many people reading the article by Raphie de Santos suggesting a nationalised oil company for a future independent Scotland will have dismissed the idea from their heads immediately ("Nationalise North Sea oil to secure Scotland's future after a Yes vote", Herald Agenda, January 14).Those of us with longer memories may recall the British National Oil Corporation.

(BNOC). There are some things I can forgive the late Mrs Thatcher for (not many), but right up there with destroying the native mining industry on my personal grudge list is the wanton destruction of BNOC. This was of course steered into existence by Tony Benn, and although the concept had its faults it did exactly what the Norwegians were successful at, and created the basis of a long-term asset management strategy for the country as Statoil is for Norway today.

BNOC was entitled to a share in all new oil licence blocks as a partner, and for some licences was the operator. More significantly perhaps, its very existence attracted a number of seasoned oil industry professionals and other talented individuals who were committed to the concept of a company which existed to make a profit for the country rather than shareholders. Had it been allowed to continue it could have developed into the same kind of worldwide force that Statoil is and would have continued to deliver a profit stream to the long-term benefit of the country, but instead it was the first sacrifice on Mrs Thatcher's altar of privatisation.

The right to a share in new assets was abandoned and became just another, not very good, private oil company (Britoil) which was later acquired by BP.

Is it still possible today? I've been out of the industry for too long now to know, but maybe there are enough who feel strongly about the country's assets to make it work in an independent Scotland. It certainly won't come from Westminster.

Niall Young,

(BNOC/Britoil, 1980-84),

Skerryvore,

Seaview Terrace, Johnshaven.

YOUR interpretation of the Treasury's assurance to financial markets that it would stand behind debts accumulated by successive Westminster governments' economic mismanagement appeared to imply that Scotland's diversified economy would be regarded as a financial bogeyman by financial markets compared to the banking-focused UK ("SNP in a difficult market place", Herald editorial, January 14).

In fact, analysis of the relative strengths of the Scottish and UK (essentially London) economies shows a number of the conclusions you draw to be somewhat flawed.

You suggest that, were Scotland to adopt a non-sterling currency, the UK Government would be in a stronger bargaining position when apportioning its debt. This assertion is dubious, as the impact on the UK trade deficit and the overall debt to GDP ratio of removing the Scottish economy and Scottish oil from the UK balance sheet would leave investors holding rest of the UK (rUK) pound-denominated debt feeling nervous. It is hard to argue that the UK moving from a trade deficit of around 4.4% of GDP to closer to 10% and increasing its debt to GDP ratio to well over 100% puts it in a strong position.

The risk premium of 1.5% that "sources" say lenders would demand of Scotland compared to the UK is equally doubtful. Just last week Ireland, despite all its economic troubles, returned to the international credit markets with a bond yielding less than 3.5% in a sale that was four times oversubscribed. This yield represents a risk premium of around 0.6% over comparable UK government debt. In examining risk premia a more pertinent question to ask of the Treasury might be why the UK has to pay 1.0% and 0.4% more than Germany and France respectively to borrow for the same length of time?

International financial markets are unlikely to be seduced by the hyperbole of big is good and small is bad. The treatment of small Scandinavian countries proves this. What the Treasury statement proved is that it is well aware of the risk to the UK's financial status of its wealthiest subsidiary leaving.

Calum Mackenzie,

4 Mount Tabor Avenue, Perth.

It will be interesting to find out whether the announcement by the Bank of England that it is willing to take upon itself payment to creditors of Scotland's share of the UK national debt following a referendum Yes vote was made at the behest of David Cameron, or whether the Governor of the independent bank did so on his own initiative ("Treasury raises fear of higher mortgages after Yes vote", The Herald, January 14).

Either way, Better Together's immediate assertion that such an arrangement would not be to an independent Scotland's benefit appears ludicrous and may be a sign of panic in the face of all the arguments that independence is better for Scotland than the Union.

This also looks like an early sign of a negotiating approach, something which Mr Cameron strongly asserted he would never allow in advance of the vote. The very appearance of negotiation at this stage represents a boost for the Yes campaign and a distinct weakening of Better Together's stance.

Michael F Troon,

15 Crawford Avenue, Gauldry, Fife.

I AM becoming heartily sick of the Yes campaign's demands for Better Together having to provide detail about its policies in the event of the inevitable No vote ("Sturgeon urges No campaign to answer 50 key policy questions", The Herald, January 14).

Why should it? The UK Government did not propose, start or encourage the referendum. Nicola Sturgeon seems to forget that if her own party had not started this nonsense we would not be wasting millions in a futile exercise of political vanity. It is only the Yes campaign that still has a myriad of answers to give, answers to crucial questions that are multiplying by the day.

G McKenzie,

19 Allendale, East Kilbride.