Hard Brexit would cost £500m a year, says oil and gas industry

3rd May 2017 | Commercial Energy

Brexit would land the oil and gas industry with a half-billion pound bill if EU exit talk end with the UK leavings on World Trade Organisation rules, Theresa May has been warned. The costs for trading £73bn of oil and gas annually would jump from £600m a year now, to £1.1bn in a worst cast WTO scenario, analysis for the industry body found.

At best, if the UK could strike more favourable tariffs with non-EU countries, the cost of trade might fall to £500m, Oil and Gas UK said. The group wrote to the prime minister this week to say its members could ill afford further costs which might hamper the industry’s fragile recovery after a two-year slump.

“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 personal required for critical operations,” the body’s chief executive, Deirdre Michie, wrote in a letter to May.

Hard Brexit

On WTO rules, the EU would apply a 3% tariff rate on exported refined petroleum goods, with a range of tariff rates applied to other goods. The result would be an extra £260m trading cost imposed on exports, and £230m on imports.

The analysis by EY for Oil and Gas UK notes that, “this additional cost would be unwelcome,” coming on top of the UK industry shredding more than 120,000 jobs between 2014 and 2016 as the price of oil slumped.

The trade body also argued that post-Brexit freedom of movement should not be curtailed in a way that would put the industry at a “competitive disadvantage” with other countries. About 10% of the UK oil and gas sector is from outside the country, slightly above the national average.

More information available on the website below