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THE IMPACT OF BREXIT ON ENERGY INDUSTRY BUSINESS: ISSUES AND CHALLENGES

BREXIT appears to have put everybody in a frenzy, not only over the form of the UK’s withdrawal but also its future relationship.  For energy industry businesses, irrespective of any political accommodation, the challenge in trading with the EU will be immeasurably different and more challenging from 30th March.

Procurement Opportunities

As we all know, Central Governments across the EU have considerable influence over their domestic energy producers, and consequently procurement opportunities are published and managed in accordance with the procedures of the Official Journal of the European Union.  Irrespective of any ‘deal’, being outside the EU will reduce the opportunities for UK businesses to successfully compete.  The natural priority will be to award contracts to those companies residing within the 27 Member States, before considering those outside of EU jurisdiction.

We have all heard the words that business requires ‘certainty’, and that ‘uncertainty’ is bad.  However, ‘change’ is the watchword of business, with businesses continually investigating market positioning and product development in order to beat the competitor.  BREXIT provides some short-term uncertainty, but the entrepreneurial businesses are already looking into the future to define those new ‘rules for success’.

Future Approach

The UK business model, which is perceived as more adversarial and aggressive than the ‘Latin’ relationship approach, may not be appropriate.  Whilst the UK cost and contract driven approach has commendable attributes, particularly over certainty of delivery, continuity of client relationship has a much lower value and relevance – it is just not ‘bankable’.

One thing that is patently obvious is that the UK approach into Europe will have to change, and change quickly, if trade is to be maintained and grow.  Partnership, and the development of local targeted subsidiary businesses employing a mixture of local and UK personnel, may be an appropriate approach.

These risks and challenges are real and overnight success will not be achieved.  There are many imponderables e.g. which state; a satellite office or partnership; a mirror image business or one that has potential to diversify; financial exposure and potential return; and finally integration of the different business cultures into a cohesive profitable entity.

Conclusion

The opportunities available to the energy industry are real, with the UK able to provide innovative approaches and solutions to its many challenges.  Energy security with diversity is seen as reducing risk potential, be it from adversarial political influence, the effect of climate change or just bad-luck due to a major system failure.

There is no ‘one-size fits all solution’ open to governments, project developers and financiers.  A fully open mind is required to explore the issues, challenges and propose workable solutions: this is the skill and expertise offered by the UK Business as it looks with excitement, tinged with trepidation, at our changing energy world.

About the Author

John Ireland is an internationally experienced energy specialist and senior business executive skilled in the development, negotiation, and management of businesses and technically complex contracts within both the Government and private sectors.  John, a Chartered Engineer and Fellow of the Institution of Chemical Engineers, has been Chief Engineer advising clients on nuclear new build in Romania and investigating opportunities in Saudi Arabia, Jordan and Turkey, and Project Manager for the treatment and management of toxic and radio-toxic chemical wastes in the UK, Japan, and the EU.                                                   

Prospect Law is a multi-disciplinary practice with specialist expertise in the energy and environmental sectors with particular experience in the low carbon energy sector. The firm is made up of lawyers, engineers, surveyors and finance experts.

This article remains the copyright property of Prospect Law Ltd and Prospect Advisory Ltd and neither the article nor any part of it may be published or copied without the prior written permission of the directors of Prospect Law and Prospect Advisory.

This article is not intended to constitute legal or other professional advice and it should not be relied on in any way.

For more information or assistance with a particular query, please in the first instance contact Adam Mikula on 020 7947 5354 or by email on adm@prospectlaw.co.uk.

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