This report is a contribution to the Strategic Environmental Assessment (SEA4) conducted by the Department of Trade and Industry (now Department of Energy and Climate Change) and provides an overview of cephalopods - squid and octopus - in the SEA4 area. Cephalopods are short-lived, carnivorous animals that have rapid growth rates and play an important part in oceanic and coastal food webs. They are preyed on by cetaceans, seals, fish and seabirds, and are predators themselves, feeding on fish, crustaceans, molluscs and cephalopods. Knowledge of cephalopod distribution in Scottish waters is mainly based on information from commercial whitefish vessels that catch squid as a by-catch. Fishery landings of cephalopods consist mainly of the loliginid squid Loligo forbesi. At present there are no commercial landings of the ommastrephid squids Todarodes sagittatus or Todaropsis eblanae. The benthic octopod Eledone cirrhosa, though a highly valued species in southern Europe, is usually discarded by Scottish fishermen. Various deep-water squid are likely to be present in the Faeroe-Shetland Channel, of which the most important is probably the Arctic squid Gonatus fabricii. Cephalopods naturally accumulate high levels of trace metals. The potential of drilling operations to introduce trace metals into the sea is discussed. But the most likely impact of oil industry activities on cephalopod populations is disturbance of spawning grounds. Although squid in spawning condition are caught every year in the SEA4 area, where they spawn is not known. It is concluded that the overall impact on cephalopods and cephalopod fisheries in the SEA4 area of further oilfield development would be slight.