Scotland’s supply chain is well placed to overcome current challenges

The latest annual survey of international activity of the Scottish oil and gas supply chain, sponsored for a second year by Johnston Carmichael, highlights the sector increased its domestic sales to £11 billion from £9.9 billion in 2012. International sales rose by 12 per cent to £11.2 billion in 2013 of which £4.2 billion came from Scottish based direct exports and £7 billion of sales via international subsidiaries.

Welcoming the results ahead of his visit to Houston to meet with a number of companies that have a presence in Scotland, Energy Minister Fergus Ewing said: “Scotland has established a global reputation within the oil and gas sector and I am delighted to see that these figures once again show the strength of the industry both at home and internationally. Despite the recent fall in oil prices and the challenges now facing the industry, this report demonstrates that our supply chain is well placed to tackle and overcome those challenges.

“Scotland continues to lead the way in the world of oil and gas. As a country that boasts a strong engineering and manufacturing skills base which is recognised globally across the oil and gas industry, we have a clear competitive advantage. There are huge opportunities open to us internationally and we are determined to make the most of those through continued support and development of our domestic supply chain, enabling it to maintain and strengthen its competitiveness internationally.”

Similar to last year, total International activity accounted for a record 50.3 per cent (50.2 per cent in 2012). Some other key findings include:

• North America remained the top region for international sales with sales rising by over a third to £4.1 billion, followed by the Middle East and Asia Pacific which rose by 18 per cent and 15 per cent respectively.
• The USA continues to be the number one market for international sales, achieving £3.07 billion. A number of new entrants, however, joined the top 10 country rankings including Singapore, Qatar, the Netherlands, Iraq and the UAE.
• As a total percent of international sales, the USA took top position, followed by Singapore and Canada.
• The Middle East, Africa, North America and Asia pacific are the most reported regions in terms of immediate growth opportunities.

Scottish Enterprise international sector head for oil and gas, David Rennie, said: “Our annual supply chain survey clearly demonstrates the importance of Scotland’s oil and gas sector to the Scottish economy. Although the figures predate the recent sharp fall in oil prices, it’s important to highlight that the sector successfully delivered another record performance in 2013. This is a real endorsement of the industry’s world-renowned reputation, built up over 50 years in one of the world’s most demanding environments.

“Looking ahead the sector faces some considerable challenges. Cost efficiency and collaboration will be key in helping to address these, as well as focussing on our competitive advantage internationally, in decommissioning and emerging areas such as Digital Offshore. Underpinning all of this, however, is innovation and leadership – that’s what will make the biggest difference of all. We are a global hub and we want to remain so for many years to come.”

The survey was delivered in the Autumn of 2014 by Aberdeen Grampian Chamber of Commerce. It combines feedback from 434 businesses employing over 23,000 people in Scotland and operating in 137 countries around the world.

Aberdeen Grampian Chamber of Commerce research & policy director, James Bream, said: “The growth in sales reflects the continuing global demand for the expertise and experience that exists in the Scottish oil and gas sector.

“There are difficult market conditions at the moment, but this research shows that our supply chain is in a strong position to meet these challenges and continue to build on its successes across the world.”

Welcoming the findings Johnston Carmichael head of oil and gas Graham Alexander said: “2013 was a record year for investment into the UK Continental Shelf (UKCS). Not only was there an increase in domestic turnover, but also increased diversification by companies into non-oil and gas activities.

“Although hurdles remain on the horizon, we are committed to supporting companies operating within the oil and gas sector, helping them achieve their long term vision and ensure that the oil and gas sector recovers from this downturn and retains its reputation as Scotland’s most thriving sector.”