During my time as an MP, the oil and gas market has been incredibly challenging for service companies and operators working in the industry. When I was first elected in May 2015 the oil price was around $62 a barrel, then dropped to around $30 before rising back up to $52. The quick and sudden decline from the $100-a-barrel 2014 rates has really dented confidence and I know it has left some companies struggling to find capital finance.
I have raised the issue of financing with a number of banks and, whilst they are clear there is no block on lending to companies involved with oil and gas, they consider that this part of their portfolio carries greater investment risk now than in the past and this is compounding already difficult economic times. Many companies in Aberdeen and Aberdeenshire are struggling to take advantage of growth opportunities because of these challenging circumstances.
I have questioned and pressured the UK Government on this issue a number of times – asking them to take action to increase confidence in the industry and ensure there is financial backing for local companies. The practical and viable solutions are just not being put in place, so perhaps now more of our local supply chain and service businesses will need to be considering moving away from traditional finance routes to try something new. I met with the London Stock Exchange Group last year and asked if they could help by providing advice to companies who are looking to grow, and they are enthusiastic to get involved.
The London Stock Exchange Group’s Elite Programme offers support and engagement to assist private companies to achieve further growth and progress. If we want Aberdeen to thrive as the centre of oil and gas supply chain technology and expertise we need local companies to be able to evolve and grow. There are ever-shifting challenges and demands and our region has the potential to address them all, but only with the right support in place to finance that. In order to secure Aberdeen’s future as the exporter of oil and gas supply chain technology and expertise, we need local companies to be able to grow and to develop new technologies to deal with ever shifting standards and the new challenges associated with wider scale decommissioning.
I know many companies have access to intellectual property that they don’t have the resources to develop right now. If we are to continue to represent the gold standard in subsea, in extraction, in enhanced oil recovery and in plugging and abandonment we need to stay ahead of the curve. This opportunity to talk to the London Stock Exchange Group can open some doors for local companies. I know LSEG are looking to increase the number of Elite companies in North East Scotland, so please join us and discover if your business could benefit from doing things differently.
Mark Fahy, head of UK small and mid cap companies from the London Stock Exchange (LSE), will to highlight details about the group’s Elite Programme on 10 March in Aberdeen at the Carmelite Hotel. To register to attend this event, please email kirsty.blackman.mp@parliament.uk by 2 March.
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