Unclear Brexit Deal Could Damage UK Oil Industry

The UK’s draft withdrawal agreement for leaving the European Union lacks clarity, which could be damaging to the UK oil and gas industry with increased costs for retaining skilled workers, analysts warn.

Earlier this week, the draft Brexit divorce deal from the EU was published, and according to analysts, it contains a lot of uncertainties in many areas.

“It’s bringing even less certainty than we had before. We don’t know if we will be leaving the customs union and it’s asking more questions than are being answered which I think will be disturbing for the oil and gas industry,” David Gibbons Wood, a business and economics lecturer at Robert Gordon University (RGU), told The Press and Journal.

Companies will react quickly once there is clarity regarding the investment and trading backdrop, but the current uncertainty is not helping the industry, according to Wood.

Yet, oil and gas is a global sector, not just an EU one, so there could be less damage compared to other industries, he noted.

According to Fiona Cincotta, a senior analyst at City Index, the UK North Sea oil and gas industry will definitely feel the cost of keeping skilled EU workers.

“Given that Brexit, with or without Theresa May’s deal, looks to restrict movement of people between UK and EU and vice versa the impact on the sector could be large, especially in an industry where competition for talent is fierce,” Cincotta told The Press and Journal.

Oil & Gas UK, the sector’s trade association, welcomed the publication of the draft Brexit deal, but said that it would need time to analyze its potential impact on the industry.  

“Our focus remains on securing the best outcome for the UK’s offshore oil and gas industry. That is, protecting the offshore industry from future EU regulatory changes, minimal friction between the UK and EU, maintaining a strong voice in Europe, protecting energy trading and the internal energy market and protecting our licence to operate,” Oil & Gas UK chief executive Deirdre Michie told The Press and Journal.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

• Abu Dhabi’s Remarkable Energy Diversification
• Latest Oil Price Slump Was ‘Made In America’
• Oil Prices Crash, But Oil Majors Aren’t Panicking