Page 22 - Gi March 2019 - Flipbook

deal or no deal– the impact of brexitfor the gas industry

UK is not heavily reliant on the EU for its
gas supply. Oil and gas from Norway, the
North Sea and the safety net provided by
LNG imports from Qatar will continue
to supply the gas demands of the UK.
It is clear that gas will continue to flow,
however what is not clear is how prices
may change as a result of potential
fluctuations in supply.
In the long term, the UK gas
sector may, as a result of Brexit, start
to undertake more research and
development of domestic natural gas,
as well as accelerating the current
advances of hydrogen as a cleaner form
of gas for domestic use.

The government’s technical note on a
no-deal Brexit
In order to prepare for a no deal, the UK the sector’s current workforce is from states these interconnectors will be able
government has published a technical outside the UK . This figure should be to continually operate as usual.
7
note on trading gas with the EU if there’s read in light of recent reports indicating
6
no Brexit deal . This note provides a that the UK oil and gas industry needs Next steps
helpful analysis on the implications to employ 40,000 staff over the next Whichever path the UK takes,
8
of a no-deal Brexit on the trade of gas 20 years . Therefore, access to workers businesses in the gas sector should be
between the UK and member states via and their key skills may be more preparing contingency plans and risk
interconnectors as well as the applicable complicated. As a result, gas businesses mitigation steps for the potential impact
codes. The key points to take away from should get a grasp on the location of of Brexit on the gas sector. Three key
this note are as follows: their workers and their movement things to consider now are:
between the UK and the EU. Ensure your business has an
Interconnector owners/ understanding of its trade with the EU;
operators will need to engage with 3. Revoking Article 50 Identify which of your existing contracts
the relevant EU national regulators The third option is for the UK to revoke go beyond 29 March 2019. Consider
regarding three key matters: Article 50. Towards the latter stages of having them reviewed with regard to
the requirements for re-approval for 2018, it was confirmed by the Court of the implications they may have on the
their access to the Capacity Allocation Justice of the European Union that this business as a result of Brexit;
Mechanism Code rules; could be done without the requirement Find out the location of your workers
whether gas will continue to be traded for all EU member states to agree to the and their movement between the UK
on the basis of the rules; and revocation. What would be needed is a and the EU. Check the dependency of
whether there will need to be a formal process to notify the European your business on foreign workers, and
reassessment of their Transmission Council of the UK’s intention to looking at implementing strategies
System Operator certifications. revoke Article 50. It is not clear at this to protect your workforce through
stage what form this formal process offering visa support.
UK market participants will need to would take, only that it needs to be
engage with an EU regulation authority “in an unequivocal and unconditional
under REMIT: manner” and in accordance with the References
to ensure trade with EU wholesale UK’s uncodified constitution. In the 1. www.theguardian.com/politics/blog/live/2019/
energy markets; simplest of terms, the revocation of jan/28/brexit-latest-news-developments-theresa-
to avoid any issue with cross-border Article 50 would cancel Brexit and this may-will-commit-to-insisting-eu-replace-backstop-
say-leading-tory-brexiters-politics-live
trade; and could only be done with public approval 2. www.energyvoice.com/oilandgas/north-
for the purposes of market in the form of vote or with the approval sea/188085/no-brexit-deal-hugely-damaging-for-
oil-and-gas-says-energy-minister
monitoring. of Parliament. Once revoked, the UK 3. www.britishgas.co.uk/the-source/our-world-of-
could remain in the EU on its existing energy/energys-grand-journey/where-does-uk-gas-
Stakeholders will be provided membership terms. 9 come-from
with information on contingency It is difficult to say what the 4. uk.reuters.com/article/uk-britain-uk-gas/qatar-
sees-brexit-as-chance-to-supply-uk-more-gas-
requirements for domestic market implications for the gas sector would minister-idUKKBN16Z14E
monitoring later in the year. be if there is a revocation of Article 5. www.bgs.ac.uk/research/energy/shaleGas/
A key area not covered by the 50; arguably it will just mean those in howMuch.html
technical notice is the impact of the gas sector will be able to operate 6. www.gov.uk/government/publications/trading-
gas-with-the-eu-if-theres-no-brexit-deal/trading-
changes to immigration rules on the as usual without the impending gas-with-the-eu-if-theres-no-brexit-deal
UK gas sector. The UK government has uncertainty of a no-deal Brexit, or the 7. www.bbc.co.uk/news/uk-scotland-scotland-
stated that, irrespective of what form of potentially unnegotiable WA. The gas business-45474989
Brexit occurs, the immigration systems sector will still be able to access EU 8. www.offshoreenergytoday.com/uk-oil-gas-
industry-to-need-40-000-new-workers-over-next-
will be subject to change. The sector workers under the free movement of 20-years
depends on access to workers from the worker regulation, and where gas is 9. Case C-621/18 | Wightman and Others v
EEA and approximately five per cent of traded between the UK and EU member Secretary of State for Exiting the European Union

22

DealOrNoDeal.indd 3 14/02/2019 12:57