Brexit's Impact on UK Oil & Gas Industry

This assignment examines the multifaceted impact of Brexit on the UK's oil and gas industry. It delves into economic implications like fluctuating GDP, international trade dynamics, and cost reduction strategies adopted by companies. The analysis also considers the influence of Brexit negotiations with the EU on market access, labor mobility, and energy trading within Europe.

What Impact does Brit
exit have on different
industries in UK?

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
In 2013 it is a historic movement when Britain voted to leave European union. These
factor has great impact on the exchange rates. Due to this change there was great decline in
pounds which is Britain's currency. United kingdom is considered as the leading and best country
to establish business but this fact can be change due to unknown threat or impact UK decision of
leaving European union could have on various organisation operating in UK and Britain.
The study have focus on analysing the impact of Brexit on different industries in United
kingdom.
MAIN BODY
These factor have great impact on various industries. It has direct effect on the growth,
success and profitability of various firm. Some industrial sector that have been affected by Brexit
are:
Energy and procurement sector-These factors have great impact on the renewable and low
carbon energy policy. The United kingdom country has got freedom from renewable energy
target that was framed by European union under the policy of Renewal energy directive and UK
energy and procurement sector also get released from EU state aid restriction. Industry United
Kingdom got freedom as well as potential to design renewable energy support regimes. But the
country may face difficulty in raising funds for investing in such energy projects that require
huge capital investment such as offshore wind. United nation is obliged to essentially minimise
its dependency on traditional resources of energy by 2020.(Armstrong, 2017)
Around £73 billion worth of oil and gas related trade (fuel and non-fuel) flows between
the UK and the other parts of world. Approx. 61 billion pound of this is related to listed
products, that may be taxable to duty in form of tariffs. (services account for the
remaining £12 billion) Under the present-day ‘status-quo’ scenario with the UK as part of
the EU, the total cost of this trade in 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
(Staffell, 2017.)
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 Under a unfavourable scenario where the UK return to WTO code of conduct with the
EU and the rest of the world, the likely cost of trade will almost double to around
approximately £1.1 billion per annum; assumptive trading behaviours remain
unchanged .If the UK can negotiate minimum tariffs with the EU and better tariffs with
the rest of the world, the total cost of trade could reduce by around approx. 99.9
pound a million per annum to £499.9 million is around £599.9 million per annum.
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 (Brexit and
the UK oil and gas industry, 2017)
As UK has planned to leave EU energy supply will be a more concern. The Legal
authority in UK intends to promote oil and gas resources. It has been stated by government that
existing regime related to the industry is effective in order to control the emission of harmful
chemicals on environment. Further they have concluded that there will no health effects that may
occur through the exposure to air as well as water pollutants. The economic viability and local
community engagement are the two major issues that has supported successful development of
shale UK prospects for renewable energy-The UK has high potential to rise the contribution to
its primary energy supply from a mixture of renewable energy technology, that start from very
low base that is approx. 1.1 percent in present era. All the technologies that are associated with
all renewable energy are either marginal to uneconomic in competition with conventional fossil
energy source in UK. The UK prospect to improve situation of the company have increased.
Government has adopted various measures and has framed various policies such as renewable
obligation and capital grants. These policies were framed to support research as well as
development (Sampson, 2017.)
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Travel and Tourism sector- Brexit has major effect on UK reputation as a destination for
spending holidays. The various impact of Brexit on travel and tourism sector are:
Increase in Staycation-There has been in increase in domestic holiday in UK that has rise to 70
percent in 2016.It has help the country in promoting destination. These factors have great impact
on the economic growth of the country.
Attitudes to overseas holidays by Brits-As staycation trend in gaining popularity, there is market
for those visitors seeking to enjoy holiday abroad. It has been identified that new experiences
are capturing and attracting travellers to visit at various destination in Britain.
The Brexit has great impact on investors that were investing in Airline industries in UK.
There has been decline in number of passengers and more reduction in number of travellers has
been expected by 2020.Airline companies that are engaged in intra-continental routes will have
much effect of Brexit. While other organisations such as British Airways will not have any
impact of these factors on its business operations. (Baringa, 2016)
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Illustration 1: Fluctuation in GDP of member states in post-Brexit period
Source:(Critical impact ion the Brexit on UK, 2017)

Economics accounting and finance-It has made financial sector more sensitive to Vulnerabilities. It has
great impact the investment strategies and policies of bid organisation that are dealing in financial sector. The
other global companies that are investing in UK finial sector such banks and other financial institution will
lose confidence. Their will be trade off between decision making authority and sovereignty. These factor have
great impact on the profitability as well as revenue generation capacity of financial institution. Economist
tends to favour Britain. There is only little impact of Brexit on this sector. The significant improvement in such
sector comes from increased business investment by global companies this may have great impact on the
growth of banking institution. ( Hunt and Wheeler,2017)
Law department-As the legal system of UK was mainly influenced by European union have great
effect on the laws and policies of UK government. It is yet to be decided that incorporated laws
and policies that was formulated by EU will continue to exit in Pro Brexit era. It is totally based
on negotiation. The other evidence of Brexit will include the requirement of orienting UK
various legislation such as Common law, family , human rights and company law applicable to
European Union. The UK government or legal authorities have right to access various data
stored with EU. (Acton, 2017)
Business management-The Brexit will have great impact on the various strategies of industries
such as marketing, investment, human resource management plans etc. There are various laws
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Illustration 2: Visit of international visitors in UK
Source:(Write pass journal,2017)

and code of conduct framed by European law such as employment law, heath and safety at
workplace etc. It will have great impact on the development of employment law. The authority
of United kingdom completely cancel implication of existing employment law which was
executed by European Union. These factors may have great effect on employees' relation. There
may be increase in chances of discrimination at workplace. This may further lead to lower wages
to workers. These factors have great impact on the development of society. Mordern
employment law framed by UK is technical and detail , it can be challenging for employees and
this can have great effect on human resource policies adopted by firm. As well as these laws
could be challenging for employers too. It may increase the burden or may create pressure on
human resource manager and creating more confusion by making important changes in basic
structure of laws. These factors have great effect on the environment in which various industries
operate. It has the potential to increase competition and reduce competencies of various
organisation. Business management planning have great influence of these variable elements.
UK leaving EU will leave a huge void for the industries as degree of impact could not be
measured. (Haq, 2016)
CONCLUSION
It has been concluded from the report that Brexit has both positive and negative impact
on various industries that are operating in UK. Mainly the legal department and finance
department has major effects of Brexit on them. Legislation is highly effected as all the laws and
policies of UK was much influenced by European Union. Financial sector such as banking
institution are being impacted as the Global companies were the source of investment for such
firms. It has been identified that travellers are highly influenced by this factor. It has been
concluded from the project that during global industry downturn the oil and gas company has
focus on increasing its production efficiency and reducing operating costs.
It has been suggested by report that in order to reduce cost burden and to ensure
advantageous trading conditions, Oil and gas company can negotiate with Eu and should give
priority to ease access to market as well as labour, maintaining a strong voice in Europe, and
protecting energy trading and the internal energy market (Alhajji, 2017)
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REFERENCES
Books and Journals:
Armstrong, K., 2017 Brexit Time. Cambridge: Cambridge University Press
Haq, A. 2016 A Short Guide to Brexit: Our Divided Future. London: AuthorHouse.
Sampson, T., 2017. Brexit: The economics of international disintegration. Journal of Economic
Perspectives, 31(4), pp.163-184.
Alhajji, A.F., 2017. OGEL Special Issue on" Brexit". Oil, Gas & Energy Law Journal (OGEL),
15(2).
Staffell, I., 2017. Measuring the progress and impacts of decarbonising British electricity.
Energy Policy. 102. pp.463-475.
Mehrotra, A., 2017. Issues and Challenges in Development of Efficient Gas Market. In Natural
Gas Markets in India. Springer Singapore.
Online:
Hunt, A. and Wheeler, B. 2017 Brexit: All you need to know about the UK leaving the EU.
BBC News. (Online). Available at: http://www.bbc.com/news/uk-politics-32810887
Brexit and the UK oil and gas industry, 2017 Available online through
<https://oilandgasuk.co.uk/brexit-and-the-uk-oil-and-gas-industry/>.
Baringa, 2016 Brexit: Impact on the UK Energy Industry. Online. Available through:
<http://baringakentico.itssystems.co.uk/getmedia/7ff72bd7-d2f7-43c1-b48f-
2b3474b1123b/Brexit_Viewpoint_EMAIL-FINAL/ >
Acton, G. 2017. All you need to know about Article 50 and the Brexit process. CNBC. Online.
Available through: <https://www.cnbc.com/2017/03/29/brexit-article-50-process-
trigger.htm>
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