Sales by oil and gas service companies based in Scotland have hit a record £15.4billion, with much of the extra cash going to businesses in the north and north-east.
The figure, an 8.3% increase on the previous year, despite the recession, is among survey findings revealed today by the Scottish Council for Development and Industry (SCDI) and Scottish Enterprise (SE).
The organisations say the rise in 2008-09 was driven mainly by continued strong growth in international business. Overseas sales totalled £6.56billion, up 15.1% from a year earlier.
Scottish oil and gas service firms reported customers in a record 109 countries in the latest period, compared with 103 international markets previously.
Much of Scotland’s oil and gas supply chain is in the Aberdeen area, which was sheltered to some extent from the global economic woes by a relatively buoyant energy industry.
The strong overall performance was boosted by the success of firms farther north, which have expanded their international business and reputations.
According to industry body Oil and Gas UK, total annual turnover for Britain’s energy service sector is about £16billion.
In 2008, some 450,000 jobs were supported directly by the servicing of activity on the UK Continental Shelf and in the export of oil and gas-related goods and services.
Aberdeen and Grampian Chamber of Commerce chief executive Bob Collier said the record sales by Scottish firms in 2008-09 was good news for the north-east economy.
“Our own figures confirm that this growth stems from a sharper focus on export skills,” he said.
According to Ian Armstrong, SCDI’s north-east manager, well over 90% of the 2008-09 Scottish sales involved firms in the Aberdeen area but companies throughout the Highlands and islands have also stepped up to the mark.
He said: “Oil and gas industry and supply-chain sales held up well during the worst of the recession.
“This is perhaps because, with many big energy projects, there is a limited extent to which you can suddenly just turn the tap off.”
Findings in the next survey, for 2009-10, are likely to be affected more by the difficult economic climate and show a flat performance by Scottish companies, Mr Armstrong said.
North America and Africa accounted for more than half of all international sales in 2008-09, according to SCDI.
Today’s report says record sales into North America reflect how active companies based or owned in Scotland are in the key oil and gas provinces of Gulf of Mexico and Newfoundland and in the Canadian oil sands business.
There was also strong growth in Latin America and Australasia, while sales into the former Soviet Union and the European Union declined.
International activity accounted for 42.6% of the Scottish supply-chain sales total, whereas 10 years ago its share was only 27%.
Domestic sales grew by 3.8% to £8.8billion.
Adrian Gillespie, director of energy and low-carbon technologies at SE, said: “It is vital that we continue to support and build a strong domestic and global supply chain to exploit future opportunities.”
Oil and Gas UK economic director Mike Tholen said: “There is a growing recognition of the contribution the supply chain makes to the UK economy, whether measured in terms of innovation, employment, direct taxation or exports.
“It is pleasing to see such a remarkable growth rate.”
Iain Smith MSP, convener of Holyrood’s economy committee, said: “The committee has agreed to hold a formal meeting in Aberdeen in the coming months as part of our new inquiry into international trade and exports
“I will be keen to work with SCDI to hear from Scottish-based firms in the oil and gas sector whether the public sector is doing all that it can to support the industry to further develop its international activities.”
A spokeswoman for economic development partnership Aberdeen City and Shire Economic Future said: “These figures underline the huge contribution of the oil and gas sector to the national economy, even in difficult times.
“The lion’s share of these will be generated by Aberdeen city and shire companies which have unrivalled supply-chain experience and expertise.”
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