Scottish oil and gas sector remains competitive on the international stage: Scotland oil and gas image

07 May 2019

Scottish oil and gas sector remains competitive on the international stage

The latest survey of Scotland’s oil and gas supply chain reveals that despite a fall in total sales reflecting the recent sector slowdown, the international proportion of sales remains over 50% for the sixth year running.

The annual Scottish Enterprise Survey of International Activity in the Oil and Gas Sector for the 2017/18 financial year reported that total sales for the period stood at £18.4bn, down 3.8% on the previous year. International related sales accounted for £9.7 billion of that total (52.7%) made up of £3.5 billion from direct exports and £6.2 billion from sales via international subsidiaries.

The survey also reported that there was an increased number of sales coming from non-oil and gas markets which reached almost a third of total sales (32%) up from around a fifth (22%) in last year’s survey.

Commenting on the results, head of oil and gas at Scottish Enterprise, David Rennie, said: “While not surprising that total sales fell during the period covered by this survey, reflecting the global sectoral slowdown, the fact that international activity remained over 50 per cent of the total for the sixth year in a row shows the robustness of the Scottish supply chain. The increase in sales into non-oil and gas markets is also encouraging and it clearly shows that the supply chain continues to diversify, and that the energy transition will provide significant opportunities for our oil and gas supply chain to develop new technologies and products for a wide set of sectors.”

The Scottish Government’s Minister for Energy, Paul Wheelhouse, said: “The findings in the latest International Oil and Gas Activity Survey demonstrate the continued importance of the sector to the economy of Scotland, with the oil and gas sector’s supply chain generating £18.4 billion in sales in 2017/18. The report also highlights the significant increase in sales from companies diversifying into other sectors, with 32% of those sales in respect of areas beyond the oil and gas sector. This clearly reflects the changing nature of the supply chain itself and the contribution that it can make, and is making, to the energy transition agenda and new activities such as decommissioning. The report also emphasises the continued increase in confidence on international growth in opportunities for the supply chain over the next two years.

“As highlighted in our Energy Strategy, Scotland’s oil and gas sector is a key component of our energy system and our economy. A strong domestic industry and supply chain can also play a positive role in supporting the global low carbon transition; indeed, the transition was a key focus of today’s Oil and Gas Industry Leadership Group meeting which I chaired in Aberdeen.”

According to the survey, the United States, Norway and the United Arab Emirates were again the top markets for international activity and looking ahead, 95% of businesses are ‘somewhat’ or ‘very optimistic’ about sales growth in the coming years.

Scottish Enterprise and Scottish Development International already support hundreds of companies to internationalise using a variety of methods to do this. The following comments from some of our account managed companies highlights the range and success of the support received:

MSIS Group - “SE has helped in many ways. Provision of funding support is always very much appreciated, but local support in places such as Brazil or the Middle East is very important. Introductions to key advisers, individuals or companies with country specific experience as well as market specific research has been very important to MSIS.”

Impact Subsea - “Scottish Enterprise has assisted greatly in our capability to seek out and identify new distributors. Impact Subsea was part of the Scottish Pavilion at the Offshore Technology Conference in Houston, USA. Scottish Enterprise has also assisted with attendance at other international exhibitions.”

Well-Safe Solutions - “We have made good use of GlobalScot’s network, a part of Scottish Enterprise. Tapping into this powerful, supportive network, gives quick and practical advice and guidance when looking to establish a company start-up internationally, covering all areas including: employment law, tax, supplier and local custom practice.”

The survey, which was conducted by Aberdeen & Grampian Chamber of Commerce on behalf of Scottish Enterprise, captures data from 240 companies who are active in 99 countries worldwide and employ over 30,000 employees in Scotland.

Commenting on the survey, Chamber chief executive Russell Borthwick said: “While sales have declined from their 2014 peak, what we can observe from these results is an industry which has tenaciously focused on competitiveness, maintaining its world-leading expertise in an extremely challenging environment. Production in the North Sea has reached a seven-year high, averaging 1.7m barrels a day across 2018, the highest level since 2011. You need only review the results of the questions on business optimism in this study to see that this increased activity has translated into heightened positivity across the industry, with this survey recording the most encouraging optimism results for the past four years.

“What we’re seeing is incredibly encouraging; an industry that’s managed to persevere through a period of tumultuous change and which is now overwhelmingly optimistic about the future. One which continues to diversify, and which still exports more than 50% of its total sales across the globe. We, alongside our partners at Scottish Enterprise and Scottish Development International, look forward to playing our part to support the continued internationalisation of one of Scotland’s most dynamic sectors.”


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Notes to editors

Key figures:

• Total oil & gas supply chain sales from the Scottish based companies reached £18.4bn in 2017/18, a decrease of 3.8% from 2016/17 (£19.1).

• Sales were made up of £8.7bn domestic sales and £9.7bn international sales (made up of £3.5bn direct export and £6.2bn international subsidiaries).

• International activity accounted for 52.7% of total Scottish supply chain sales, down from 54.5% in 2016/17. Companies reported operating in 99 countries across the globe.

• The top growth markets for international activity in the immediate future were identified as United States, Norway, and the United Arab Emirates.

• 95% of businesses are very or somewhat optimistic about the next two years

• Over the next five years businesses forecast:

o 8% growth in domestic sales

o 48% growth in direct export sales

o 2% growth in sales via international subsidiaries