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These tiny islands may hold the key to Scotland’s independence

Shetland has 0.5 percent of the country's population — and 50 percent of its oil.

Scotland oil 08 22 2014Enlarge
(Andy Buchanan/WPA Pool/Getty Images)

LERWICK, UK — In 1469, with his daughter set to marry King James III of Scotland, King Christian I of Denmark and Norway gave his new son-in-law the Shetland Islands, a tiny archipelago in the storm-tossed North Sea.

Five hundred years later, as Scotland considers whether to sever its 307-year-old union with England, Christian’s wedding gift has turned out to be far more valuable than either king could have imagined.

There’s oil in Shetland’s seas. A lot of oil.

As preparations are finalized for next month's referendum on independence from the United Kingdom, North Sea oil and gas revenues form the bedrock of Scotland’s plan for economic sustainability.

Today, taxes from North Sea energy ventures go straight to Her Majesty’s Treasury in London without passing through Scottish hands.

Should the referendum pass, the new maritime boundary would leave a newly independent Scotland with more than 90 percent of Britain’s remaining oil, more than half of its gas and 100 percent of the revenues those resources generate.

Scottish First Minister Alex Salmond has said oil money will underwrite everything from pensions to a Norwegian-style reserve fund.

But the question of just how much oil is left and how much it’s worth is dividing pro- and anti-independence camps.

Industry estimates range from 10 billion to 33 billion barrels. The Scottish government relies on a figure of 24 billion.

It claims that in 2016-17, the first year of an independent Scotland’s existence, tax revenues from oil and gas would be somewhere between $11 billion and $13 billion.

That’s more than twice what the UK government forecasts for that year.

Last week, Ian Wood, a Scottish oilman widely considered Britain’s top industry expert, said the Scottish National Party’s barrel count was 45 to 65 percent too high. He believes the oil income could collapse in just 15 years.

In the middle of this storm is Shetland, whose waters contain an estimated 50 percent of what would be Scotland’s oil and gas.

Oil money has made these islands one of the most economically vibrant spots in Britain. It’s not clear how or if independence would change that. As a result, Shetlanders are viewing next month’s referendum with a great deal more skepticism than many of their mainland countrymen.

A sea of black gold

With its treeless low hills and dramatic cliff scenery, parts of Shetland seem largely unchanged since Vikings settled here 1,300 years ago.

It’s a place where sheep outnumber people and highway drivers still slam on their brakes to avoid shaggy Shetland ponies crossing the roads.

The discovery of oil forever changed life in this onetime community of subsistence farmers and fishermen.

Since Shell Oil’s discovery of the Brent oilfield off the islands’ west coast in 1971, more than 8 billion barrels have been pumped from the seabed and transported to Sullom Voe, the oil terminal that was until recently Europe’s largest.

In the 1970s, Shetland’s farsighted executive council negotiated a historic revenue-sharing arrangement that gave the islands a royalty on every barrel passing through Sullom Voe, plus revenue from the local authority’s ownership of the port there.

For an industry where the contents of a single tanker can run to billions of pounds, it was a drop in the bucket. For the islands, it was a windfall.

Shetland’s oil funds are now worth $333 million. The 23,000 people scattered across its 15 inhabited islands enjoy some of the best public services in Britain.

Islands with not many more people than a crowded New York City subway car boast public schools, pools and daycares that wouldn’t look out of place in a posh Connecticut suburb. A community trust pays for traditional fiddle lessons in schools, free public gyms and a host of social programs.

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Oil brought more jobs than there are Shetlanders. Old cruise ships and “floating hotels” off the main island’s coast house thousands of contract oil and gas employees.

Unemployment here stands at 0.6 percent and has remained consistently below the Scottish average since the 1980s.

It’s a comfortable arrangement, one many Shetlanders are reluctant to upend by voting to join a new country.

“Sod that,” says Sam Hesketh, a 28-year-old employee on a salmon farm off the island of Yell. “We get so much already up here. If Scotland was to go independent they should have done it in the 1970s when they had all the oil. They’re 40 years too bloody late.”

Scotland’s Vikings

With less than a month to go before the Sept. 18 referendum, mainland Scotland is a crazy quilt of billboards, bumper stickers, homemade yard signs and landscape art extolling support for either the Yes (pro-independent) or Better Together (pro-union) campaigns.

In Shetland, however, there’s nary a bumper sticker to be found. The Shetland flag — a Scandinavian-style white cross on a background of azure blue — flutters on far more poles than either the Union Jack or Scottish Saltire.

It reflects locals’ common refrain that they don’t see themselves as Scots. Or Brits. They’re Shetlanders, period.

“You don’t get people here playing bagpipe or wearing tartan or speaking of the Jacobite revolution or any of that,” says Brian Nicholson, a musician and owner of High Level Music in Lerwick.

That’s partly because Scotland — or anywhere else, for that matter — is really far away. It’s a 12- to 14-hour ferry ride to Aberdeen. The closest train station is in Bergen, Norway.

Commercial flights to Scotland are breathtakingly expensive. One man said he’d once found a cheaper fare to Texas from Edinburgh than to Shetland’s Sumburgh Airport.

Fishing, shipping and the extractive industries have brought people here from around the world. Locals pride themselves on their ability to welcome and adapt to new people.

“Shetland has been obliged to become quite a cosmopolitan little lump of rock in the middle of the ocean,” says Ronnie Eunson, a sheep farmer in Uradale. “We’re all incomers” — the Shetland word for immigrants. “This is not a part of the world that’s naturally suitable to human habitation.”

Many Shetlanders say only half-jokingly that it makes more sense for them to join Norway than an independent Scotland.

Streets named for the Norwegian Kings Erik, Harald and Haakon crisscross the capital city Lerwick. The biggest holiday of the year isn’t the Scottish New Year celebration Hogmanay but Up Helly Aa, an annual January fire festival with Viking roots.

“I don’t think that anyone would imagine London or Edinburgh saying ‘You can go back to Scandinavia,’ because we’d take half the North Sea oil with us,” Nicholson says with a laugh.

A place apart

Soon after the Scottish referendum was announced in 2012, some Shetlanders considered a succession attempt of their own.

John Goodlad, a former head of both Shetland and Europe’s fishermen associations who ran for parliament on a separatist platform in 1987, says he believes the islands’ prosperity may have dampened enthusiasm for independence.

A petition for a Shetland referendum circulated briefly this year, but politicians soon abandoned separatist talk.

Instead, the executive councils of Scotland’s three main island groups — Shetland, Orkney and the Western Isles — formed a joint campaign called Our Islands Our Future, which lobbied both the Yes and No campaigns for more powers for the islands.

In June, Salmond offered the islands control of seabed leasing revenues in the event of an independent Scotland, which was beyond what the group had asked for.

For independence skeptics, that’s not enough.

Collecting profits from the seabed isn’t much good if Edinburgh’s calling the shots on how they’re used, says Tavish Scott, Shetland’s representative in the Scottish parliament.

“The nationalist government in Edinburgh’s approach has been to remove powers from island communities,” he says. “My concern is that they want to take [Shetland’s share of the revenues] and give it to Edinburgh.”

A spokesman for Salmond’s office said no decision will be made about how oil revenues will be shared in an independent Scotland until after the vote.

Yes or no?

There will certainly be some Yes votes from Shetland’s polls on Sept. 18.

Edinburgh may be far away, pro-independence Shetlanders said, but the British government in Westminster is even farther.

There’s little love for the Labour or Conservative parties in Shetland, which regularly sends Liberal-Democrats — a minority party on the mainland — to the UK and Scottish parliaments.

But by far the most common response to questions about independence is a smile and a polite but firm, “I haven’t decided yet.”

Probe a bit further, and locals will just as cheerfully admit that that evasive answer is bollocks. Independence or no, residents say that on these small islands in a stormy sea, peace is more valuable than political arguments.

“That ability to get on is a real self-defense mechanism for living in a small place,” John Goodlad says. “Everybody’s got to get along in this community together. You’ve got to have the ability on a Saturday night all to go to the village hall.” 

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