After the decision to exit the EU was announced, the United Kingdom is positive that their oil and gas industry will continue to prosper, given that Scotland is still one of the biggest producers of petrol in Europe. Whilst the UK isn’t expected to experience any negative impacts in terms of their oil and gas supplies and production post-Brexit, business leaders are still calling for leadership from the new government to clear up any uncertainty.
Airswift CEO Peter Searle said in an interview that Brexit signals a bright future for the UK North Sea. However, the expert said investment from international companies might affect the exploration projects in the area.
“The only worry would be the reluctance of some foreign or overseas oil companies investing into the North Sea further, or into other exploration projects either on the mainland in other areas of the United Kingdom or in other energy sectors,” said Searle.
Whilst the UK isn’t expected to experience any negative impacts, it’s not the same for the rest of the nations left in the EU. After Brexit, Aberdeen will no longer be the crude capital and the largest producer of oil and gas in EU.
With the UK’s decision to exit the union, it created a major problem for the remaining European countries and Russia have warned the other members of the EU it could have implications further down the line.
“The consequences will be very hard to predict,” said Alexander Novak, Energy Minister of Russia. “If EU members begin to quit the union then this may have a significant consequences for the rate of economic growth and as a result affect the price of oil.”
Now that the UK is set to exit the EU it will be dependent on its self-produced oil and gas. Based on the data shared by market insight website FXCM, domestic oil production currently stands at approximately 50% of the UK’s demand, where their self-produced oil and gas now supply over 70% of their total primary energy needs. FXCM also stated that the UK has roughly 380 oil- and gas-producing fields, with over 90% of them based offshore. Whilst Brexit may not have brought any negative impact on the industry just yet, experts foresee that the issue of oversupply may further affect the price of fossil fuels in the region, which will be followed by a huge drop in the price of oil and gas products.
Similar to the recent issues that plagued the whole global natural gas market, oversupply has become one of the variables that have forced the price of petrol down as low as $28 a barrel.
Due to economic turmoil, many smaller oil companies were forced to shut down at the start of the year. The rest of the market is made up of multi-national firms that were experienced to survive these challenging economic times. Some of the larger multi-natural companies were able to further expand their social connections and close vital partnership deals with other businesses to strengthen their hold on the industry.
The small oil companies in the UK are expecting hard times, trying to maintaining their investments over the course of the next two years with the impending issues related to low crude prices and oversupply.
Experts said shale gas will not be a viable prospect to secure power in the UK, even though the government is positive about their hydraulic fracturing projects.
“Shale gas is very contentious, but the chances of getting any serious volumes of the resource in the next 10 years is extremely limited,” said Simon Flowers, Wood Mackenzie Energy chief analyst.