How might Brexit affect the oil and gas industry?
Information in a study commissioned by Oil & Gas UK, which looks at the possible cost of trade for the sector and illustrates where the UK sector‘s workforce comes from, has been highlighted in a letter to the Prime Minister which focusses on the potential impact of Brexit on the energy industry. The letter was sent to the Prime Minister on Monday.
On trade costs, the data shows:
- 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 percent 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 percent are UK national, 5 percent are EU workers from countries other than the UK and 5 percent are non-EU
- Around 70 percent 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 percent.
“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.”
Global Offshore rebrands Enelift and invests in global hubs
Global Offshore has rebranded Enelift and will invest "a seven-figure sum" in establishing new support hubs in Houston, Dubai, Singapore, Perth and the Caspian during the next six months.
The investment will cover oil, gas and renewables, mainly concentrating on manufacturing capability with associated R&D, as well as in stock held in the hubs.
The company’s flagship Hinge Lok technology provides aluminium, non-welded light weight transportation cradle for casing and tubing. Enelift now plans to enhance its offering by augmenting its existing solutions with robotics and remote operational and training technology, which will reduce manpower for handling offshore equipment that is transported and stored using the Hinge Lok system.
Enelift is partnering with "a Japanese robotics company" and the technology will be trialed with "a Norwegian operator on a Norwegian drilling rig", according to a statement.
Operating from its bases in Aberdeen, UK and Esbjerg, Enelift was founded by 35-year industry veteran and Managing Director Paul Brebner 10 years ago to offer the offshore energy industries safe, reliable and efficient storage and transportation of equipment.
The expansion plans are bolstered by the appointment of Jim Clark of the Craigendarroch Group to Chairman, and Adam Maitland to Non-Executive Director. Maitland is the Managing Director of Hutcheon Mearns IF, and brings his wealth of expertise in the field of corporate finance.
Brebner said Enelift may be a new name in the market, but the experience it brings is "industry renowned".
"Our solutions are underpinned by safety that enables inefficiencies and their associated costs to be eradicated – meaning operational personnel can focus doing what they do best, safely. We remain committed to providing the safest storage and transportation solutions for equipment in the sector as we grow our global operations," he said.
Clark said the market is changing and its solutions fully support customers’ economic and safety aspirations.
"We are very well placed to take full advantage of increasing opportunities in the Middle East, Africa, Far East and Americas. Safety is our absolute commitment to our customers and our support hubs will facilitate this. Aligning our identity to our entire offering ensures that we will drive our expansion through new products and global support sites across the rest of this year."