Brexit brings a new period of uncertainty for the UK oil and gas sector

Scott Lehmann's picture
Scott Lehmann, VP Product Management and Marketing, Petrotechnics
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The decision adds a potentially complex layer of political, economic and business uncertainty to the already challenging UK oil and gas operating environment. An environment characterised by a sustained low oil and gas price environment and its impact on ageing assets, declining operational efficiencies and increasing operating costs.

However, as the immediate shock of Brexit begins to fade, much of the concern around the uncertainty will as well. Putting a number of the areas of uncertainty in perspective, we come away with the following:

  • The UK is not exiting the world; its economy is the fifth largest globally and the second largest in Europe. Despite Brexit, the UK and the EU are inextricably linked and one can be confident that a model of cooperation between the two entities will be agreed.
  • Brexit does not change the taxation, licensing and regulatory regime for the sector.
  • Success for the UK oil and gas sector does depend on our ability to attract highly skilled talent to our shores and leaving the EU may limit the mobility of people both in and out of the UK.
  • The influence of the UK oil and gas sector on the global industry in terms of expertise, experience and innovation is much greater than its daily production numbers and this is unlikely to change.
  • The future of Scotland is the biggest area of uncertainty for the sector. We have seen calls for a second referendum on independence, following a strong sentiment among Scottish voters to remain in the EU.

So, what does the UK sector need to do to not just weather the uncertainties but come out on top as a global leader?

The focus for the sector needs to be on winning and not just surviving the current disruptive business cycle for the UK oil and gas sector. Looking beyond layoffs and the deep cost cuts there is a real opportunity to build longer term stability through more effective operating models.

By systematically addressing many of our core business issues – including process safety, personal safety and health, environment, reliability and efficiency – and embracing advances in digital technologies, we can begin to optimise production and drive operational excellence throughout our organisations.

It is this transformation to operational excellence that provides the real opportunity today to build an effective business model that is a sustainable boom, bust or Brexit.

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