Brexit pouring oil on troubled water
Expert says lack of clarity could hamper investment
THE offshore oil and gas sector could face “choppier waters than necessary” under a no-deal Brexit, an expert warned yesterday.
Professor Paul de Leeuw, director of the Oil and Gas Institute at Aberdeen’s Robert Gordon University, said the industry had done “a remarkable job” increasing production in the North Sea between 2014 and 2018 in the face of various challenges.
But he warned: “Without major new investment, production is forecast to decline from early next decade onwards.
“Therefore it will be key to ensure ongoing investment during the Brexit transition window to safeguard production and jobs from 2020 onwards.
“This will require urgent clarification around the ‘rules of the game’ and possible transition arrangements so investors can be confident about continued investment in the UK oil and gas sector.”
De Leeuw said some aspects of leaving the EU in March 2019 won’t have a huge impact on the industry.
He explained: “Many of the EU directives, legislation and other industry good practices relating to oil and gas have originated or have been developed in close collaboration with the UK.
“Although it will take some considerable time to untangle the complex regulatory and policy frameworks, the impact for the oil and gas industry is likely to be modest.”
But he added: “By moving from the current trade arrangements to the WTO’s framework in the no-deal Brexit situation, the supply chain could be exposed to delays in moving critical goods and services – and potentially to additional tariffs – thereby increasing the industry’s cost base and risk profile.”
An end to freedom of movement could be another “challenge”, with an estimated 10 per cent of the 170,000 people employed in the sector being non-UK citizens.
De Leeuw said: “With the industry relying heavily on access to international skil ls and capabilities ranging from hi- tech industry jobs to crews on standby vessels, this may be one of the more challenging areas to be addressed.”