The trade body for the UK oil and gas industry has written
to the Prime Minister highlighting research findings that assess
the potential impact and opportunities of Brexit on the
sector.
The study - commissioned by Oil & Gas UK - looked at
the possible cost of trade for the sector and illustrates where
the UK sector’s workforce comes from.
On trade costs, the data shows that:
-
Around £73 billion worth of
oil and gas related trade (fuel and non-fuel) flows between the
UK and the rest of world
-
Approximately £61 billion of
this is related to traded goods, which may be subject to
tariffs (services account for the remaining £12 billion)
-
Under the current ‘status-quo’ scenario with the UK as
part of the EU, the total cost of this trade in goods is
around £600 million per annum (less
than 2% of the total value of trade subject to tariffs)
-
Under a worst-case
scenario where the UK reverts to WTO rules with
the EU and the rest of the world, the likely cost
of trade will almost double to around £1.1 billion per
annum; assuming trading behaviours remain
unchanged
-
If the UK can negotiate minimal
tariffs with the EU and improved
tariffs with the rest of the world,
the total cost of trade could fall by around £100
million per annum to £500 million
On labour movement, the data shows:
-
Of those directly employed by the oil and gas industry in
the UK, 90% are UK national, 5% are EU
workers from countries other than the UK
and 5% are non-EU
-
Around 70% of the EU workers in the industry are skilled,
with one in two holding managerial roles
-
Oil & Gas UK understands that these skilled roles
filled by EU workers are often critical for projects and asks
Government to consider these posts when developing domestic
immigration policy.
To minimise any Brexit cost burden and to secure beneficial
trading conditions, Oil & Gas UK recommends the UK Government
prioritises the following during negotiations:
-
Frictionless access to markets and
labour
-
Maintaining a strong voice in
Europe
-
Protecting energy trading and the internal energy
market
Deirdre Michie, Chief Executive of Oil & Gas UK, said:
“Oil & Gas UK is an apolitical organisation representing a
large and diverse membership where there will be a variety of
views. While the trade body can’t take a position on
Brexit, we commissioned the research because we need to
understand the possible impact on our industry - and the possible
opportunities - from exiting the EU.
“We also identified other EU policy issues as critical to
the oil and gas industry and will require negotiation with
European counterparts, as well as discussions at the domestic
level between Government, regulators and industry during the
Brexit process.
“During the global industry downturn, our industry has
continued to focus on increasing its production efficiency, and
on its unit operating costs which have improved by almost
50%.
“We are becoming a more globally competitive industry, but
we continue to be very sensitive to any additional burdens either
in relation to cost, or restrictions on the movement of key
personnel required for critical operations.
“There are still up to 20 billion barrels of oil and gas to
recover from the UKCS and, if properly supported, our already
world-class supply chain could double its turnover by
2035.
“Oil & Gas UK would welcome discussions with Government
officials to outline industry’s concerns and opportunities and
help identify a path forward during Brexit
negotiations.
“Our request of Government is that any change, whether
domestic or European, is managed in a manner that minimises risk
to the oil and gas industry and provides predictability and
clarity wherever possible, through constructive dialogue and
consultation.”
The letter was sent to the Prime Minister on Monday.
