Scottish firms in the oil and gas supply chain are internationalising at a rapid pace – even more so than their counterparts in the rest of the UK, according to a recent survey.
A high proportion – 63% – of Scottish-headquartered companies have been involved in international expansion, while 70% expect to be engaged in working overseas, the report from Bank of Scotland has found.
This compares to 53% and 56% of firms based in England.
Stuart White, Area Director Bank of Scotland Commercial Banking North of Scotland said there is a “continuing shift in vision towards more distant horizons, with companies based in Scotland markedly more eager to reach out abroad”.
The report stated that Scottish companies are much more orientated internationally, with two-thirds getting less than 10% of their income from the North Sea. Overall, a third of UK oil and gas companies get more than 70% of their income from the North Sea, while a third get more than 90% from international operations which emphasises the global nature of the business but also indicates a significant tail which is rooted in the home market.
Meanwhile, a large majority – 69% – of Britain’s oil and gas executives see plenty of growth ahead despite talk of the North Sea being in decline.
But Mr White said this figure represents a decline in optimism. Last year, the 77% of respondents predicted growth for their business last year.
Part of the problem is sharp rises in operation costs, up by 15.5% in 2013. The number of fields with an average operating cost greater than £30 per barrel of oil equivalent doubled in the last year.
Mr White said: “These pressures are having an effect. While Oil & Gas UK reported that ten new field developments costing £8billion and expected to recover 460 million barrels of oil, and 26 extensions of existing fields started in 2013, Chevron and Statoil separately postponed for a year investment decisions totalling £10billion on two fields with a combined 490 million barrels.”
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