Potential Consequences of Brexit for the Oil and Gas Industry

Potential Consequences of Brexit for the Oil and Gas Industry

April 30, 2019

Brexit is all across the news. The new deadline for the departure of UK is October 31, as set by the EU. Theresa May says that an earlier exit could be possible, if MPs agree and sign a deal before May 23. In this case, you could also avoid European elections.

Today, the UK government will debate, if there will be a public vote on Brexit and if yes, if they will integrate it into the European election plan.

What does Brexit mean for the oil and gas industry?

UK is the largest producer of offshore oil and gas in the EU. Even after Brexit, changed directives or regulations by EU institutions could have negative impacts on the UK oil and gas industry.

statistics oil &gas uk

Source: Oil and Gas UK

According to the UK government, by 2035 two-thirds of the UK’s energy needs will be achieved by oil and gas.

The National industry group Oil & Gas UK demands from the UK government that also after Brexit free access to EU markets should be guaranteed. This would prevent double trade costs.

But about what amount of costs do we speak here? The annually costs are £600 million (€695 million) for trade in oil & gas -related goods, as per Oil & Gas UK. These costs could rise or fall after the Brexit, depending on the trading deals agreed by the UK government.

Brexit and skilled labour

Challenges how to recruit and to get access to skilled labour could also be possible after the Brexit. Where can you find new talents and experts from abroad, if getting a working permit is complicated? Currently, 5 % of the whole oil & gas industry UK workers are from other EU countries, 7% from offshore oil & gas.

If a smooth switch between the EU and UK would not be possible anymore, skill shortage might lead to project delays, to the outsourcing of project management outside the UK or in the worst case to the shutdown of production.

Further potential issues could be the delayed transport of equipment to a post-Brexit UK. For example, when Bulgaria was not a member of the EU, it took four days to transport goods from Bulgaria to Aberdeen. Extended border controls could lead to immense delays.

A neverending drama?

Being German, the whole “Brexit struggle” reminds me of a theatre play that could have been written by Lessing or Schiller. A government that does not agree on fundamental decisions, public demonstrations, all in the United Kingdom. The fact is, the viewer never gets bored.

How will the Brexit discussion continue?

Can you imagine other consequences for the UK oil & gas industry?

Feel free to share your opinion with us!

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