COLUMN: UK's Abandonment of EU Could Have Dramatic Impact on Oil, Gas
Writing this on the heels of President Barack Obama’s trip to England where he waxed philosophic on Brexit with his buddy, Prime Minister David Cameron, I’m pretty sure I know what you’re thinking: Great. Another arrogant American telling Great Britain what it should do.
On the contrary. My research into how Brexit (shorthand for Great Britain leaving the European Union) would impact the oil and gas industry around the world illustrates an impressive variety of scenarios. In short, whether you’re for Brexit or want to maintain the status quo, oil and gas has a lot at stake.
Several business leaders – perhaps most notably, Bob Dudley, CEO at BP – have spoken out, denouncing Brexit. In a BBC story, Dudley said that without the backing of the EU, Great Britain’s standing on the world stage may fade. And, he added, the EU needs Britain, and the opportunities afforded by the fifth largest economy in the world.
“There are lots of technical tax reasons, trade flows, regulations, that would make it better for our business and the energy business in general, the oil and gas business, [if Britain] were a part of Europe,” Dudley told the BBC.
The U.K. joined the European Union (when it was known as the European Economic Community) in 1973. Britons go to the polls on June 23 to elect whether they want to remain there. An April 21 poll by The Economist showed in its poll tracker that 51 percent of Britons want to stay in the EU; 40 percent support Brexit; and 9 percent don’t know.
I put the question to Cary Larry, director of oil and gas business development at Frost & Sullivan. He drew parallels between the U.K.’s dilemma and the confusion in Saudi Arabia.
“In the oil industry, you’re seeing a similar theme [to the Brexit debate]. You’re seeing a lot more countries [in Europe], whether they own oil production or not, become much more energy independent. Everybody is kind of going their own path,” he said. “With Britain leading the EU, it could be we’re seeing people trying to work out their best deals. As we’ve seen in OPEC, when a major company leaves a group or union, or in the case of OPEC, a cartel, it weakens the strength of the remaining countries.”
To Have and Have Not
In short, it creates a world of “haves” and “have nots.” Access to oil and gas being the chief ‘have’ in this scenario.
Larry said Brexit could strengthen Great Britain, solidifying its presence in the oil-rich North Sea. If the U.K. split from the EU, it would no longer be tied to the fluctuating market and troubled economies of some EU countries. It could address issues in the North Sea, including a lack of investment there.
“If [Great Britain] can have a (successful) economy, if they can show some kind of strength – it would help their investment opportunities in the North Sea,” he said. “We could see, from a production standpoint, something good come from it.”
From a demand standpoint, however, struggling countries would likely grow weaker. While Germany and France could hold their own, Larry said, other countries would suffer.
“If they suffer, it’s going to be harder to pick up their demand,” he said. “Others may not see a need to deal with EU as a whole for oil and gas. Deal with countries separately, and if those countries have the money and the credit to deal, they can [make deals]. If they don’t, it could be a very big detriment to them.”
12
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- The Rigzone Interview: Private Equity Cash Focuses on Oil, Gas Development
- Could Argentinian Politics Beat the Vaca Muerta?
- The Rigzone Interview: Oil, Gas Goes Digital for Safety, Speed
- Deal Of The Month: EQT, Rice Energy Merge in Mega Marcellus $6.7B Gas Deal
- OpEd: OPEC Production Cuts Fail, Markets Pay for Underestimating US Shale
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension