Brexit: The impact of Brexit on the UK oil and gas industry
In January 2017, the leading trade association for UK-registered companies working in the global energy industry, Energy Industries Council (EIC), hosted a roundtable event with Minister of State for Trade and Investment RH Greg Hands MP, and 12 senior level delegates from its member companies.
On the agenda were the challenges and opportunities that British suppliers to local and global energy sectors are facing. Here is a summary of the issues that were raised and discussed at the event, and how the Government is looking to positively react to the impact of Brexit.
1. THE INDUSTRY’S ‘SHOPPING LIST’
Amongst the wider discussion of exporting and funding, oil and gas industry delegates used the event to voice their shopping list of requirements for the Government to act on:
- Continue with a clear relationship with the EU – Delegates want to keep the barrier-free relationships and access to the EU markets, with low or no tariffs at all. A migration system that enables businesses to retain EU workers and skills was also mentioned.
- Protect investment – Delegates wanted a smooth transition of Article 50 to minimise disruption, to negate the potential problem of underinvestment in the UKCS and other key areas. There was also a call to protect access to the EU research and development innovation funding for UK firms.
- Internal alignment – As well as a clear regulatory plan to facilitate the ease of trade, delegates wanted Governmental departments, such as the Department for International Trade (DIT), Her Majesty’s Treasury, and Prime Minister’s Office – No.10, to be fully aligned and joined up for all of UK businesses, and not just the oil and gas industry.
2. FUNDING STILL REQUIRED
Concerns were raised by delegates about the balance of funding the DIT provides for inward investment activities, compared to exporting. Funding for trade events and envoys globally, in countries around the world, for example, are needed to support the UK oil and gas industry.
The Minister’s response was to guarantee that the DIT would shift their attention more towards exporting, with extra support for the supply chain. This guarantee was extended further by the Minister agreeing to look into the validity of more funding for trade events, and to help promote the skills of trade envoys globally – a resource with a full range of services that are currently “underappreciated”, according to the Minister.
3. EXPORTING IS A PRIORITY
Greg Hands MP revealed at the roundtable event that the UK has the lowest percentage of exports of any EU country (27%) and that the Government has a responsibility to improve this figure considerably.
Delegates were keen to hear how the Government were focussed on securing a good deal for UK exporters in light of these statistics, as well as provide support to those firms who already have an overseas presence.
Other European countries “remain positive” about working with British firms, according to the Minister, who also revealed that UK companies investing in overseas were set to become a key focus for the Department for International Trade (DIT). While negative media coverage had not helped the cause, “the UK’s post-referendum economy is much stronger than anticipated.”
NEXT STEPS FOR THE UK OIL AND GAS INDUSTRY
More roundtable events are set to happen between the EIC and Department for International Trade, to ensure the UK oil and gas industry continues to grow.
The event has helped to shed light on what the UK industry needs to do to thrive in the global economy. The UK industry only needs to look across the North Sea to witness the successful relationship Norway has created with the European Union. As Peter Searle, CEO of the world’s biggest oil and gas recruitment firms, Airswift, describes:
“Leaving the EU could ultimately signal a more prosperous future for the UK North Sea. Norway, a key player in the energy industry, already exists successfully outside of the EU and now it’s the UK’s time to carve out its own future.”
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