The UK will get ready to leave the European Union in less than four months time. With negotiations still taking place, we explore the possible impact of Brexit on the Oil and Gas Industry.
With warnings about trade disruptions from the Bank of England, and rapid preparations for the eventuality of a consensus failing to be met, it seems like the oil and gas industry may be seriously affected by the risk of a no-deal Brexit. So, what will happen? The truth is that nobody is quite sure. Despite setbacks and restructuring in recent years, and a complete downturn in investments made, the oil and gas industry has proved hardy and capable of renewed growth and expansion.
Whilst some companies are predicting a lack of supply, it is expected that the industry is on track for an increase in production, and a stable level of imports – the majority of which will continue to arrive from non-EU countries.
The workforce may also be impacted when Brexit arrives. There is likely to be a level of increased restrictions on the movement of people between the UK and EU, and vice versa. Oil & Gas UK’s Brexit report states that 5% of workers employed in the UK oil & gas industry are EU nationals and many of these are highly skilled so addressing this issue is key.
Without clear cut new trade agreements with other countries, additional tariffs may be imposed on non-fuel goods within the industry through the World Trade Organisation (WTO) framework.
However, it is likely that the UK’s oil and gas industry’s strong positioning will prove a sufficient bargaining chip to avoid major problems with its future independent trade with the EU. Neither should tax positioning change, given that the UK Government has always retained control over its energy policy and its reserves of oil and gas.