Brexit Could Boost Gas Investment
If the UK opts to leave the European Union in the forthcoming June 23 referendum, there could be a case for greater investment in its own domestic gas resources and infrastructure to secure supplies, according to an energy lawyer.
Penelope Warne, UK senior partner at law firm CMS, said in a commentary on the company's website that: "there may be a case for investment in new indigenous sources of gas (such as shale gas) and new UK gas storage and LNG facilities in a Brexit scenario."
Over the past decade the UK has becoming increasingly reliant on imported gas supplies, including piped gas from Norway and LNG supplies from countries including Qatar, Algeria and Trinidad & Tobago. Warne noted that imports of gas from the Continent via the interconnector pipelines with Belgium and the Netherlands were also important "when additional gas above the longer-term Norwegian contracts is needed, for example in cold weather."
She said: "it is in that type of scenario that security of gas supply to meet UK demand could be overtly impacted by a Brexit, if the rules in the EU are developed to have an effect on the gas which could be transported."
Developing greater resources in the UK itself would help to counter any additional risk. But it might require government support, with developers wary of major projects in recent years.
"The UK government may therefore need to promote directly such projects in the national interest," said Warne, "and consider how developers of such projects can overcome planning obstacles and be assured of sufficient revenue streams to justify the initial capital investment."
The biggest immediate effect of the debate is a general uncertainty in the economic climate that could slow progress of new projects, she said. Warne said there could be an "investment hiatus" beginning before the referendum "as credit and investment committees go slow on projects and transactions waiting to see how the future landscape will shape itself."
CMS has 3,000 lawyers around the world, including 39 offices in 18 EU member states.