Brexit is to bring changes to the UK economy but it is unlikely to hamper the strong industry ties that currently exist between the UK and the EU in the field of oil and gas, says data and analytics company GlobalData.
The UK oil and gas industry relies heavily on EU, as imported natural gas from pipelines that cross Belgium and the Netherlands contributed around 13% of the total natural gas imports into the UK in 2018.
Moreover, UK government data revealed that UK gas exports to Ireland rose to a four-year high in November 2019 and are expected to continue rising as Ireland’s domestic supply declines.
It is highly likely that the UK will aim to prevent any disruptions to oil and gas arrangements currently in place with EU countries. However, should a devaluation of Sterling against the Euro occur post-Brexit, imported EU-piped gas would become more expensive for the UK – having a knock on effect on the consumer. That being said, alternative avenues of gas imports such as international LNG create flexible alternatives of energy security for the UK and the gas market will continue to remain competitive while playing a vital role in the UK’s energy mix,
…Daniel Rogers, Oil and Gas Analyst at GlobalData, comments.
In terms of crude oil, UK exports to EU countries in 2018 accounted for 63% of the country’s total crude oil exports equating to £10.8bn in value, the same data showed.
Most of the export value derived from Germany and the Netherlands.
As such, being able to maintain strong oil and gas ties with the EU will be a high priority for the UK as securing reasonable cross border agreements and preserving export ties for UK oil and gas products are of national importance.
In the North Sea, there is a number of oil and gas fields either straddling country borders or utilising cross border infrastructure. Past collaborative efforts particularly between the UK, Norway and the Netherlands have enabled cross border developments and generated value for the UK oil and gas industry, something that is unlikely to change as a result of Brexit,
…Mr. Rogers continued.
As far as shipping is concerned, last month, UK Chamber of Shipping’s Policy Director stated that the sector will not change much, ‘at least not immediately’.
Because of the transition period introduced in the first agreement and into the second there won’t be much change, as the UK will remain in the single market and keep its current customs and border arrangements, he namely explained.
Meanwhile, as the UK officially exits the EU, the automatic right of EU vessels to fish in British waters, under the EU’s common fisheries policy, is to end, in a move that several UK parties consider a key benefit of Brexit.
