Strong UK-EU Oil and Gas Ties Should Endure Post-Brexit
Despite the United Kingdom’s formal withdrawal from the European Union on Jan. 31, 2020, the strong relationship the country’s oil and gas industry enjoys with partners in the EU should continue post-Brexit, data and analytics firm GlobalData predicted Friday.
“It is highly likely that the U.K. will aim to prevent any disruptions to oil and gas arrangements currently in place with EU countries,” GlobalData Oil and Gas Analyst Daniel Rogers commented in a written statement emailed to Rigzone.
Illustrating the U.K. oil and gas industry’s reliance on its neighbors in the EU, GlobalData pointed out that 13 percent of the U.K.’s total natural gas imports in 2018 arrived via pipelines from Belgium and the Netherlands. Also, citing U.K. government data, the firm observed that U.K. gas exports to Ireland hit a four-year high last November and should continue to grow as Ireland’s domestic supply declines.
In the event of a post-Brexit pound sterling devaluation against the Euro, imported EU-piped gas would become more expensive for U.K. consumers, Rogers said.
“That being said, alternative avenues of gas imports such as international liquefied natural gas (LNG) create flexible alternatives of energy security for the U.K. and the gas market will continue to remain competitive while playing a vital role in the U.K.’s energy mix,” he continued.
Referencing more U.K. government figures, GlobalData stated that 63 percent of the U.K.’s crude oil exports in 2018 – valued at GBP 10.8 billion – went to EU countries. Noting that Germany and the Netherlands accounted for most of the export volume, the firm asserted that securing reasonable cross-border agreements and preserving export ties with the EU will be critical for the U.K.
“In the North Sea, there is a number of oil and gas fields either straddling country borders or utilizing cross-border infrastructure,” observed Rogers. “Past collaborative efforts particularly between the U.K., Norway and the Netherlands have enabled cross-border developments and generated value for the U.K. oil and gas industry, something that is unlikely to change as a result of Brexit.”
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