Internationalisation is critical for Scotland’s growth and one of the four themes in the Scottish Government’s economic strategy.
For the oil and gas sector, facing considerable challenges right now, there’s never been a more important time to maximise international opportunities and capitalise on our global reputation and demand for skills, expertise and experience.
Results released today in our annual Oil & Gas Supply Chain Activity Survey show the sector delivered a record year in supply chain sales – total sales increased by three per cent to £22.9 billion during 2014 with international sales accounting for £12.2billion, 53 per cent of the total. Over recent years the international share of the total has increased significantly from 31 per cent in 2002.
Split by geography, the report shows the United States, Angola, Nigeria, Australia and Kazakhstan were the top five country markets for international activity during the period whilst the United States, Norway, the United Arab Emirates and Malaysia expect to have the most growth opportunities in the future.
In one hand these results clearly demonstrates Scotland’s international strength and the value of the sector right across the globe, but in the other, we know the sector right now is in a different place now than it was in 2014 and that next years figures may reflect that.
That said, this is a resilient sector used to price volatility and each year, despite the challenges, it has continued to deliver strong growth.
Five years ago, total sales stood at £15.9 billion and international sales were £7.2 billion.
Over this five year period, total sales have grown by 44 per cent and a hugely impressive 69 per cent rise in international sales.
These figures are a strong reminder of just how crucial the sector remains internationally. And with the right focus and support, we want to ensure it remains so in the long term.
At Scottish Enterprise and Scottish Development International we are doing everything we can to support the sector’s international ambition. For the last 15 years we’ve undertaken this survey to provide us with information to ensure our support is focussed in the right areas.
Africa, for example, became the top international regional market for supply chain sales during 2014 with activity reaching £2.75 billion up from £0.9 billion the previous year.
Over the last few years we’ve invested a significant amount of resource into this market after it appeared in the 2011/12 survey results as the top market for growth opportunities.
Since then we’ve set up an office in Ghana to develop and encourage stronger links with the region and delivered a number of missions to both East and West Africa.
For the first time, Iran and Nigeria appeared in the top ten countries for growth opportunities, markets we’ve started to actively support.
In December last year a couple of colleagues visited Iran for the first time to try and identify opportunities for Scotland’s oil and gas sector.
The visit, which was sponsored by the Iran Ministry of Petroleum/National Iranian Oil Company (NIOC), played an instrumental role in building relations with this key market from both an inward and outward perspective. And further follow up activity is planned.
Australia also saw activity during 2014 with several companies creating local bases to exploit major investments there.
We continue to support the supply chain in this key market and most recently organised a delegation of 17 companies to attend Australia Oil & Gas in Perth Western Australia in February.
Helping companies to access these key markets is a priority for us and trade missions are just one of the ways we do this. Our ‘country guides’ on selected markets also provide information which sets out international opportunities matched with Scottish capability, and our GlobalScot network continues to provide advice and assistance to develop new relationships and business opportunities.
During 2014/15, we supported 308 Oil and Gas supply chain companies to internationalise, an increase of 23 from the previous year, of which 82 were high value interventions totalling almost £600 million.
Together with our partners and stakeholders we want to support even more companies on their international journey, particularly during these difficult and challenging times, and would encourage companies to get in touch to discuss their international growth plans.
Even in the current environment, opportunities exist for many companies in areas such as in the Middle East and Asia. We are ready to provide the maximum amount of help and advice we can to help even more companies achieve their international ambitions.
The nature of global markets means nothing stays the same but with our intelligence on the ground, both in Scotland and overseas, as well as the huge amount of information we gather through surveys such as this means we are well placed to help Scotland’s oil and gas supply chain focus on the right markets at the right time.
David Rennie is international sector head of oil and gas at Scottish Enterprise.
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