No impact on UK licensing regime from ‘no deal’ Brexit

A map showing the areas covered by the 30th licensing round.
A map showing the areas covered by the 30th licensing round.

A “no deal” Brexit will not impact the UK oil and gas sector’s licensing regime, but would alter obligations for emergency stores, the government has confirmed.

The UK energy department said the established regime for hydrocarbon licensing and environmental issues will “continue to operate” in the event that negotiations fail.

It said legislation would be amended to ensure “broad continuity” and that UK and EU business do not need to take any action.

The UK would no longer be subject to an EU directive requiring certain levels of emergency oil stocks to be held.

But Britain would still be bound by International Energy Agency oil stocking obligations, which are slightly lower.

The government stressed a “no deal” scenario was “unlikely” to come to pass, but that it was “preparing for all eventualities” out of a sense of duty.

Earlier this week, Oil and Gas UK (OGUK) warned that a “hard” Brexit could cause a skills shortage precipitating the shutdown of North Sea platforms.

Julia Derrick, oil and gas partners at law firm Ashurst, welcomed the government’s efforts to provide clarity on licensing.

Ms Derrick said: “For companies involved in the upstream sector, it is reassuring to have clarity that, in the event of a ‘no deal’ outcome, the licensing and environmental regime relevant to upstream industry in the UK will remain broadly the same and that no action needs to be taken by UK or EU companies.

“However, as emphasised in OGUK’s Economic Report published earlier this week, a ‘no deal’ scenario could have negative economic consequences for the upstream oil and gas industry, in terms of issues such as increased costs of trading and difficulties in accessing markets and labour.”