A no-deal Brexit would have negative implications for oilfield services companies operating in the north-east, says UK Business Secretary Greg Clark. Credit: NIOSH.

UK Secretary of State for Business, Energy and Industrial Strategy Greg Clark has warned that withdrawing from the EU without securing the 21-month transition period would be ‘hugely damaging’ to north-east oil industry.

Speaking at a roundtable discussion at the Oil and Gas Technology Centre in Aberdeen, Clark noted that the north-east specifically has a strong international focus and that additional costs brought on by a no-deal Brexit would harm the region’s oilfield services exporters.

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He said: “My view is the same as every business at this meeting, which is that ‘no deal’ would be hugely damaging for the UK, Scotland, and in particular the north-east, which is a very internationally focused region.

“It would also damage other EU countries. The reason we’ve established such close and sophisticated supply chains for components is because it’s efficient and beneficial to do so. If you were to interrupt them and introduce costs and frictions, then that is damaging to both parties.”

Specifically, the subsea technology industry in the region would be affected, despite the high demand for skills and products worldwide.

High demand for north-east oil services

The business secretary also said he felt positive about the UK oil and gas industry’s bid for a sector deal intended to boost exports of equipment and services.

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“I have no doubts that the future of the UK oil and gas industry will continue to be strong because its fundamentals surpass anywhere else in terms of technology and experienced people,” Clark said.

“But you can put impediments in the way. Failure to agree a positive Brexit deal would introduce delays and costs at time when industry is replete with opportunities. That would be a bad mistake.”

If a deal can be reached, EU citizens would be permitted to work in the UK until the end of 2020. This would give employers more time to prepare against growing warnings of industry skills shortages.

Clark concluded: “It’s strongly in everyone’s interests to conclude the negotiations satisfactorily and that’s why the white paper was published with commitments to do what it takes to avoid friction.”

A no-deal Brexit seems even more likely after EU negotiators took issue with Prime Minister Theresa May’s proposals.

Bank of England governor Mark Carney said the chances of leaving the EU without a deal were “uncomfortably high”. The value of the British pound fell to a 12-month low yesterday amid fears that a deal would not be finalised in time.