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Oil & gas sector logistics expert urges industry's EU traders to continue no-deal Brexit preparations

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Oilfield Technology,

An oil and gas sector logistics expert has advised the industry’s EU traders to continue preparing for a 'calamity' no-deal Brexit, as this remained a strong possibility and could still occur this month.

David Johnson, managing director of Leeds-based Tudor International Freight, said there was understandable relief among affected businesses at concessions Prime Minister Theresa May had made in the event of a revised withdrawal agreement being rejected by the Commons next week.

He said the Prime Minister had announced that, following such a defeat, the house would first be able to reject the option of the UK leaving on 29 March, its current exit date, without a deal. If this happened, MPs would then have a chance to instruct the government to seek an extension to this deadline.

Mr Johnson warned, however: “Even if the relevant votes are to reject a no-deal outcome and seek a deferral of our departure, a cliff-edge exit will be far from off the table.”

He explained one reason for this was no-deal would remain the default legal position. It would therefore take effect on 29 March if it was not replaced through an amended version of the withdrawal agreement receiving Parliamentary approval or an extension to this date being agreed by the EU, both of which were far from certain.

Mr Johnson said: “One obstacle to approval of the amended deal is latest reports suggesting any concessions the government can extract from the EU on the so-called Irish backstop, apparently the main reason for the original withdrawal agreement’s Commons rejection in January, will be insufficient to overturn its record 230-vote defeat.

“In addition, any deadline extension would have to be agreed unanimously by the other 27 EU states and in recent days French president Emmanuel Macron plus other senior bloc sources have said a deferral would only be granted if it was for a clear and important purpose. This could be to hold a second referendum or general election, but not merely to give the UK more time to prepare for no-deal, for example.”

Mr Johnson added that, even if a deferral was agreed, Mrs May had made clear that she favoured only up to a three-month extension. He said: “Given the current Parliamentary deadlock, in which there’s apparently no majority favouring any outcome, it’s perfectly feasible oil and gas businesses could find themselves approaching the end of this limited extra period with nothing significant having changed and a no-deal Brexit again looming, as it is now.”

Mr Johnson said a UK government paper published in recent days, which had received relatively little national media attention, had underlined just how damaging a no-deal Brexit would be for oil and gas industry EU traders.

He said: “The document estimated around 240 000 UK businesses, which currently only trade with the bloc, would become subject to customs processes. It also stated the likely administrative burden on British companies overall from the additional customs declarations required, given current trading volumes, would be about £13 billion a year.”

Mr Johnson said the paper acknowledged additional controls at borders “would be disruptive”. It also made clear the EU would hold any goods lacking the right paperwork and not correctly customs cleared, which, it said, were “expected to be a significant proportion in the early period after exit day.”

In addition, Mr Johnson said, the paper admitted the flow of goods via Dover and Eurotunnel could be “very significantly reduced for months.” It also stated the effect of factors such as new tariffs of up to 70% on UK imports from countries in the EU and with which the bloc had free trade agreements “is likely to be severe in a number of areas”.

Mr Johnson said: “We’ve been advocating, on behalf of oil and gas sector companies whose freight we forward, for many months, that the government should avoid a no-deal departure. While we welcome next week’s opportunity for the Commons to vote against such a calamity on 29 March, affected businesses should continue their preparations, as, sadly, no-deal remains a real possibility, either this month or at some point in the future.”

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