UK Subsea Oil and Gas Sector Grows by Almost 30%

A new study carried out by Arthur D. Little and commissioned by industry body Subsea UK has revealed that the Subsea oil and gas sector has grown from UK3.35 billion in 2006 to UK4.3 billion in 2007.

For the third consecutive year Arthur D. Little conducted the survey, which provides the only comprehensive review of the UK subsea oil and gas sector. It seeks to provide an accurate picture of the size and scale of the industry sector and its year-on-year performance. Some 800 companies, providing direct employment for around 30,000, are involved in the UK subsea sector.

Stephen Rogers, Global head of ADL's energy practice, said: "The subsea market has shown a strong revenue growth of 29% in the last year, driven by increased demand and rising raw material costs. ADL's data shows that an increasing percentage of oil and gas production is based on subsea production; for example our most recent estimates indicate that 29% of UK production is from subsea tie-backs, compared to 23.5% in 2003. As a result, Arthur D. Little market research forecasts continued growth for the medium term." The year-on-year growth rate exceeds market expectations with further increases expected for the short term.

Subsea UK's chief executive, David Pridden, said: "The UK remains an attractive market for most players with potential for continued high levels of activity. However, most of the bigger companies are focusing on developing work streams and key projects in areas such as West Africa, North Africa and Asia Pacific, as well as Australia, Brazil and the Gulf of Mexico."

However, there are challenges ahead. The findings from the latest study released today also show that international business accounts for just over 50% of the sector's revenues. Exports have risen by 26%, increasing at a similar rate to the market growth.

Ben Thuriaux-Aleman, the ADL manager who led the study, argues: "The UK Subsea industry continues to export around half of its products and services and appears to have maintained its international competitiveness. Given geographical shift in new work-streams to West Africa and GoM, Arthur D. Little expect exports to increase at a faster rate than the UK Subsea market in the future."

Mr Pridden goes on to argue that the industry must deal with the export challenge: "The key to future growth will be the ability of UK companies to fully capitalise on the international potential. At the moment the UK is the global market leader, but we risk losing out to the likes of Brazil, Norway and the US if we cannot meet the critical demand for suitably qualified engineers and become faster at bringing new technology to market.

"I made similar comments when last year's results were announced and little has changed. While businesses have realised the value of working in a pan-industry way to address some of the challenges, we have failed to attract support and interest from Government.

"We must act from a position of strength. With these exceptional levels of performance, we have a window of opportunity to capitalise on our market-leading position and secure the long-term growth of this sector. But this requires collaboration between the industry, academia and government to deliver skilled people and an effective technology programme."

Mr Thuriaux-Aleman said that the study, which highlights recent market consolidation, across the UK subsea market, "highlights the opportunities consolidation can provide to integrate service delivery, access new distribution networks and develop economies of scale to deal with escalating material costs."


Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Field Project Assistant
Expertise: Project Management
Location: Midland, TX
Tax Specialist Required for Global Service Company in Houston
Expertise: Accounting
Location: Houston, TX
Administrator / Office Supervisor
Expertise: Accounting
Location: Sugar Land
search for more jobs

Brent Crude Oil : $52.42/BBL 2.12%
Light Crude Oil : $49.51/BBL 2.35%
Natural Gas : $3.17/MMBtu 2.25%
Updated in last 24 hours