AN ANNUAL survey of Scotland’s oil and gas supply chain has revealed 10% growth in yearly sales to a record £14.2billion – but also highlighted uncertain times for the sector ahead.
Launching their latest joint report on domestic and international sales activity involving service firms based in Scotland, the Scottish Council for Development and Industry (SCDI) and Scottish Enterprise (SE) said yesterday the industry’s long-term prospects remained strong despite the difficult economic climate.
The survey revealed global sales increased by 19.5% to £5.7billion in 2007/08, with activity seen in more than 100 overseas markets for the first time.
Sales within the UK were up by 4.3% at £8.5billion.
Supply firms are widely expected to report another successful year in 2008/09 but it is thought likely the global financial crisis will be reflected in figures for the next year and beyond.
SCDI north-east manager Ian Armstrong said: “With costs still high throughout the supply chain and the oil price much lower, oil companies are re-examining their investment plans.
“Smaller independent operators are struggling to raise necessary capital to proceed with projects and it seems likely that the current, much tighter lending environment will be with us for some time to come.”
Mr Armstrong called on the UK Government to use next month’s Budget to introduce incentives to stimulate investment and help companies to get finance. This would encourage maximum recovery of the estimated 25billion barrels of oil left in the North Sea and support the supply chain, he said.
He added: “It is also highly important that both the government and the oil and gas industry do not lose sight of the skills needs of the sector.”
SE energy director Brian Nixon said uncertainty facing the UK Continental Shelf in the current economic recession meant international opportunities were key to future growth and should be “vigorously pursued”.
Renewable energy projects were another area of potential new business for the supply chain, he added.
The US was by far the top market for export sales from Scottish service firms in 2007/08, with orders – both direct and via subsidiaries – worth a total of £1.37billion.
Canada and Norway were new entrants – second and third respectively – in the top five, with Russia and Azerbaijan fourth and fifth.
West Aberdeenshire and Kincardine Liberal Democrat MP Sir Robert Smith also stepped up pressure for tax relief in next month’s Budget to encourage more investment offshore following the report. He said: “The industry needs tax incentives now to ensure the vital investment in the North Sea.”
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