logo-loader
Market ReportOil & Gas Market Wrap

North Sea oil companies likely to take hit from 'Brexit'

Referendum result is likely to compound industry woe caused by lower oil prices

13604282334_784033e4c0_o-(1).jpg
Could the referendum result cause the sun to set on North Sea oil?

Britain's North Sea oil industry faces increased uncertainties following the "leave" result in the country's EU referendum, according to rating agency Standard & Poor's.

Oil companies are likely to take an indirect economic hit as the outcome weakens the "predictability, stability and effectiveness of UK policymaking", the agency said.

The vote result is likely to affect the UK's economy, GDP growth, and fiscal and external balances.

The likelihood of a second independence vote in Scotland, which voted overwhelmingly to stay in the EU in the June 23 vote, is likely to compound the uncertainty.

S&P has already reacted to the referendum outcome by downgrading the UK's sovereign rating on June 27.

The agency said it believed the direct rating consequences for companies operating in the UK North Sea were limited.

But it added: "That said, the increased short-term political, fiscal, or financing uncertainties are unlikely to support any reversals in the declines in investment and exploration since 2014, spurred by falling oil prices.

"What's more, even if North Sea investment were to pick up following the two or so years of negotiating the terms of a 'Brexit', the impact of a lack of spending in 2016 and 2017 could potentially have disproportionate consequences."

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: Altech Chemicals progresses HPA plant construction in...

Altech Chemicals Ltd (ASX:ATC) managing director Iggy Tan updates Proactive on HPA plant construction activities at the company’s high purity alumina (HPA) plant site in Johor, Malaysia. The majority of Stage 1 construction is nearly complete, the workshop building and OSD Tank walls have...

6 hours, 28 minutes ago

2 min read