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UK oil and gas sector urged to continue preparing for no-deal Brexit

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Oilfield Technology,

Adam Johnson, director of Leeds-based Tudor International Freight, has said the UK oil and gas industry should continue preparing for a no-deal Brexit, despite Parliament's recent passing of legislation designed to avert such an outcome.

Johnson said: “We welcome Parliament instructing the government to seek a deferral of the UK’s departure from the EU, if no withdrawal agreement is in place or MPs haven’t authorised a no-deal Brexit by 19 October. As things stand, if neither development occurs, the government will have to ask the EU to delay the UK’s leaving date by three months to the end of January 2020.”

The Commons took this step following repeated pledges by Prime Minister Boris Johnson that Britain’s membership would cease on Halloween, whether a withdrawal agreement was in place or not. These raised the imminent prospect of a no-deal Brexit, which many experts believe would seriously damage the country’s economy.

Johnson added, however, that oil and gas businesses should maintain their contingency planning for a no-deal Brexit, time-consuming and expensive though these preparations could be.

He said: “Even in the absence of a General Election, a UK departure without a withdrawal agreement could still occur as early as 31 October, as any application for an extension has to be approved by all 27 other EU member states, which is not a certain outcome.

“It’s also true that, even if this deferral is forthcoming, a future no-deal Brexit remains the legal default result, which will take effect unless an alternative arrangement replaces it, and the Commons has repeatedly, over an extended period, failed to agree on what this more positive outcome should be.”

Mr Johnson welcomed what he called “limited indications” of government progress in preparations for a no-deal departure in the last few weeks.

He said: “These have included the announcement of plans to spend £30 million on improvements to port infrastructure, plus road and rail connections - though these can’t make a substantial difference anytime soon - and the allocation of an extra £20 million for combatting traffic jams in Kent.

“The government has also decided to allocate Economic Registration and Identification numbers, which are mandatory for outside companies buying from or selling to EU businesses, to around 89 000 VAT-registered UK enterprises automatically.”

Mr Johnson added, however, that one reason a no-deal Brexit, and certainly one as early as next month, was undesirable was that the country remained underprepared for such an outcome.

He said: “We welcome the fact that the Department of Transport has just announced a multi-million-pound information campaign, aimed at ensuring businesses and their freight forwarders are aware of the processes and paperwork that would apply to customs and border crossings in the event of a no-deal Brexit. We’re also positive about the government this week emailing 70 000 haulage operators, industry bodies and other parties with key details.

“However, the fact is oil and gas sector businesses are still largely unaware of the relevant procedures and documentation, which are vital matters. With less than 40 working days until our possible EU departure, they may therefore have precious little time for purposes such as understanding and staff training, which might well exacerbate the widely-predicted traffic chaos at ports.”

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