Survey Points to Growth of UK Oil and Gas Supply Chain


A new survey reveals a strong and expanding UK oil and gas industry supply sector as more overseas companies recognize British expertise in oilfield goods and services.

Turnover from the exporting activities of oil and gas supply companies is estimated to be around £4 billion, representing just under a third (27 percent) of their total oil and gas related earnings of around £15 billion.

The survey was carried out in October by Experian, the independent global business solutions consultancy and its findings are published today by the UK Offshore Operators Association, the representative organization for UK oil and gas producers, in a report entitled "Sizing the Export Market of the UK Offshore Operators Supply Chain".

It paints the first detailed picture of the shape and size of the UK oil and gas supply chain, identifying ownership structure and turnover trends, as well as the value of its exports business. The study also determines barriers which limit exporting and the factors which could encourage greater overseas trade.

About a half of the 235 companies surveyed (a net 47 percent) reported that their oil and gas related export earnings had increased over the past two years while a net 50 percent also said they expected this business to continue to grow over the next two years. These exports tend to be in overseas markets requiring highly skilled labor and advanced technology, since lower-skilled labor and global commodities are more likely to be available locally.

The research also found a significant proportion of businesses to be UK owned (73 percent) with just over a quarter being in foreign ownership (27 percent). Over half of the UK owned companies have overseas operations while around a quarter have set up representative offices overseas.

Well over a third (39 percent) of companies said they had found no barriers to exporting, but a significant proportion (27 percent) felt that their export activities were hampered by excessive red tape.

UKOOA estimates that export sales from the UK generate an additional 100,000 jobs in this country, over and above the 380,000 jobs already supported by the domestic activities of the UK oil and gas industry.

"Having largely evolved to support North Sea exploration and production, the UK oil and gas supply chain is emerging as a significant economic force in its own right," says Mike Tholen, UKOOA economics and commercial director. "Technologies and expertise developed for use in the UK continental shelf, one of the harshest and most challenging oil and gas provinces in the world, are now highly sought after around the globe, offering UK-based companies potential for future growth.

"This is providing the foundation for the UK to establish itself as a true world-leader in engineering, technology and services, a role which it can continue to play long after North Sea production has finished.

"There is an opportunity here to bring benefits to the whole of the UK, but the potential prize for Aberdeen and North East Scotland in particular is huge."