Brexit no deal is no worry for North Sea oil and UK energy sector

Economic warnings around a no-deal Brexit have reached fever pitch proportions. If Bank of England governor Mark Carney’s latest Doomsday portent comes to fruition, house prices will collapse and the streets will be choked by dole queues if the UK unceremoniously crashes out of the European Union. Certainly, the energy industry will also be affected; just don’t expect the petrol pumps to run dry, or the lights to go out on March 29 next year. Based on the evidence at hand, the nation’s vital oil, gas and electricity industries can continue to prosper even in the hardest of hard Brexit scenarios. Firstly, losing jurisdiction over Britain’s oil reserves in the North Sea is theoretically bad for Europe because it pushes up the bloc’s dependence on imported crude from outside the region. The UK and non-EU member Norway currently account for 84% of all European production, according to the BP Statistical Review of energy. Neither should a weak pound seriously threaten a strategically important industry, which uses the US dollar as its global currency de jure. Labor costs – among the offshore sector’s biggest overheads in the North Sea – should be kept in check by sterling’s depreciation against the greenback.… continue reading

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