Will Brexit Have an Adverse Impact on the UK's Oil and Gas Industry?

The Brexit aftershock has shaken the UK to its core, with the nation quite literally divided in a vote that saw 52% wanting to leave, and 48% determined to stay. The eventual ‘Leave’ outcome saw the pound drop to its lowest level against the US dollar in more than three decades, with economic experts warning that the economy is set to experience ongoing volatility.

Major oil and gas repercussions “unlikely”

That said, analysts are remaining largely positive when it comes to the oil and gas outlook. They assert that the UK voting to leave the EU is “unlikely” to have a major adverse impact on the nation’s offshore oil and gas industry, which attracted around £11.6 billion in capital investment in 2015.

In an Airswift poll conducted prior to the Brexit referendum, just one third of energy sector workers wanted to remain in the EU. CEO Peter Searle even claims that with the right direction, the UK North Sea oil and gas sector could actually benefit from the departure.

“However, 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," he says.

Reassurance from industry giants

Big name oil and gas giants haven’t recoiled in the wake of Brexit, with integrated energy company SSE reassuring Brits that the result poses no immediate risk to its current operations. Royal Dutch Shell has confirmed that it will be working closely with the British government and EU institutions to minimise implications, while BP has confirmed that its headquarters will remain in the UK.

While the UK’s decision to leave the EU isn’t expected to cripple the British oil and gas industry, major companies are calling on the government to step-up with strong, clear leadership in order to minimise volatility. A keynote concern is a decline in interest from foreign oil companies that may shy away from investment. Analysts maintain that his could have a knock on effect on jobs, which could trigger long term instability over the next three to four years.

Could Scotland vie for independence?

Another fundamental issue is the question of a second Scottish independence referendum. Analysts warn that this could further exacerbate the challenging landscape created by the oil price slump, and spark even more uncertainty surrounding the value of North Sea oil investments.

Comments from trade association Oil & Gas UK echo these concerns, with a recent statement admitting that the industry is at "a critical juncture." Investment in the UK Continental Shelf is critical, with the association urging the government to “work constructively to make this transition as smooth as possible” in order to “minimise any potential period of uncertainty."

While the UK rejected a politico-economic union of member states across Europe, collaborative intergovernmental organisations do play a hugely important role in global missions. For example, the United Nations created the Globally Harmonised System (GHS) of classification and labelling of chemicals, a concept that’s explored in the article, ‘Achieving Compliance with GHS HazCom Standard.’