The UK’s oil and gas service sector is one of the UK’s greatest industrial success stories as a wide range of businesses have grown to serve the needs of oil and gas operators in the UKCS and also further afield globally.
The OGA has been established to regulate, influence and promote the UK oil and gas industry in order to achieve our statutory principal objective of maximising the economic recovery (MER) of the UK’s oil and gas resources. We don’t directly regulate the service sector but recognise that our supply chain is vital to achieve MER UK and improve and sustain competitive advantage.
While operators are tasked with providing the capital, operational funding and the expertise to explore, locate and bring hydrocarbon development forward, it is the wider service sector that provides most of the highly skilled workforce and many of the technology enabling solutions.
In 2014, annual turnover peaked at approximately £40 billion and around 40% of this was generated through exports. Since then, a combination of the current low oil price and high cost base has had a negative effect on confidence and investment, yet there remain many opportunities to turn this around.
The Supply Chain Strategy outlines the OGA and industry’s shared vision for the UKCS’ supply chain to 2035, to grow the UK service sector’s share of both the domestic and global market.
If the service sector builds on its global competitiveness and attracts the necessary investment, OGA analysis shows additional turnover of well over £200 billion can be generated over the next 20 years by doubling the UK service sector’s share of the global market and increasing its share of the domestic market.
To achieve this, the Supply Chain Strategy has three overarching priorities:
1) Maximise the economic potential from the UKCS by:
• Making cost and efficiency improvements to unlock additional investment
• Creating new business conditions between operators and the service sector where risk and reward are appropriately balanced
• Increasing UK service sector share of domestic work from 50% to 65% through to 2035
• Collaboration through regional and multi-operator work campaigns
2) Anchor the service sector in the UK by:
• Leveraging funding and expertise to maintain and build technological advantage in the UK
• Maintaining and developing a skilled workforce, bringing forward a new generation of trainees
• Creating a portfolio of diverse new work, including a special focus on offshore decommissioning and low carbon projects
• Providing a platform for the industry to contribute to the new UK Government Industrial Strategy process
3) Double the accessible international market share by 2035 by:
• Identifying and promoting accessible and growing international openings
• Using the UKCS as a base to develop new technological solutions and to match them to potential export markets
• Working with government departments and trade associations to prepare UK companies to exploit new and developing markets
We are all aware that the service sector is currently facing a number of strategic difficulties which have been exacerbated by the ‘lower for longer’ environment. Lack of clarity of investment plans, the supply/demand balance and competition globally are all factors that the OGA is committed to working with its network of government, trade associations and other agencies across the country to address urgently.
With industry’s involvement, we can capitalise on the UK’s strong, technologically advanced and diverse supply chain for the next chapter.
Read the Supply Chain Strategy here.
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