In the last 10 months, since the Prime Minister triggered Article 51, the UK has been in a series of negotiations to arrive at a mutually satisfying withdrawal from the EU.
The early months were not easy following the friction that ensued between both sides, but it appears all may be coming to a smooth resolution after all. A date, March 29, 2019 (still tentative) has been set for the final exit.
As people and businesses prepare for that significant day, what sectors are going to be most hit by the separation? We look at one of the UK’s key sectors; the oil and gas industry.
Many economists and energy experts believe that Brexit alone, is not poised to have a massive impact on how the oil and gas industry is regulated, including its activities on the UK Continental Shelf (UKCS). This is because to a large extent, the UK government has always maintained control over its energy policies and the growth of oil and gas reserves, as you would expect coming from a country with a strong pedigree from producing flow control components.
The UK government will continue to oversee major policy issues such as appraisal, development and production activities, including the licensing and taxation of oil and gas exploration. However, there are key changes that have been initiated by the referendum and they have the potential to impact significantly on the UK oil and gas and wider energy industry. Reason highlighted below.
Does the EU Law still apply? Will there be changes to the current regulations when exit from the EU is concluded?
There has been no material changes to the pre-Brexit regulatory and legal system mandated by the Petroleum Act (1998), nor is it likely to in the near future. According to David Davis, the government will maintain its position on policy even after submitting a formal notice of withdrawal.
What will happen by March 19, 2019, when Brexit is complete?
The dominant opinion is that the current legal and regulatory regime will not change considerably after Brexit. Based on an independent assertion of the UK offshore oil and gas regulatory regime performed after the tragic accident in the Gulf of Mexico in 2010, it is deemed fit for function. The UKCS oil and gas industry is managed under world class standards, and has raised the bar. It continues to set the standards for operations worldwide.
How will the reorganisation of the government affect the industry?
Following the results of the EU referendum, David Cameron stepped down for Theresa May to take the reins as Prime Minister.
Other changes include the dramatic merger of the Department of Business, Innovation and Skills with the Department for Energy and Climate Change to form a new Department of Business, Energy and Industrial Strategy (BEIS). Greg Clark was also appointed as the Secretary of State for BEIS.
So far, these changes are geared towards allowing many UK companies develop a sound energy strategy as they ventures out on their own (without the EU) to negotiate international trade deals.
No doubt, Brexit will herald some changes to the industry within the course of its implementation, but none so significant as to negate the revenue for government and indigenous businesses alike.