Subsea survey shows sales down but investment in technology and exports vitalNews // June 10, 2016
A snapshot survey by industry body, Subsea UK, has revealed that, while sales have dropped since the oil price collapse, the UK’s subsea industry is maintaining its investment in technology and looking to increase exports. Around 90 per cent of respondents have seen sales decrease in the last 18 months. Of those, 28 per cent saw sales drop by 30-40 per cent and a further 28 per cent have lost half their revenues with sales decreasing by 50 per cent or more. Almost 6 per cent reported no impact on sales and almost 4% have seen an increase in revenues.
Around 80 per cent felt that the financial institutions have lost faith in the sector. However, only 5.7 per cent were looking to refinance and 7.7 per cent are actively seeking new investment.
Almost 70 per cent of companies surveyed were not actively recruiting and 28 per cent were recruiting fewer people than they were in 2015. More than 20 per cent of respondents said that they were still employing apprentices to support their business, however recruitment on the whole has dropped, with only 8 per cent of companies reporting that they are looking to employ more people than they were 12 months ago.
Underwater technology, systems and processes have been helping recover more hydrocarbons from the North Sea since the eighties. The skills and expertise honed in the UK have led to the creation of a £9 billion industry which employs around 50,000 across the country. Subsea UK’s 300-strong membership, which represents the majority of the subsea companies in the supply chain, were surveyed to provide evidence-based insight into the impact of the oil and gas downturn.
Subsea UK chief executive, Neil Gordon, said: “The decline in oil price and subsequent industry-wide downturn has seen a massive reduction in CAPEX and OPEX budgets worldwide which have impacted on the subsea sector where we are seeing job losses and the collapse of companies, putting the UK sector’s enviable world-leading position under threat. The findings from our survey underline the negative impact on revenues and recruitment but they also reveal positive signs of the sector adjusting and adapting to the lower for longer oil price environment which will ensure we are well-placed for the future.”
The subsea sector’s role in extending the life of the North Sea and maximising recovery of reserves is vital. But, with more than half of the revenues generated attributable to international sales, Mr Gordon said that the sector’s enduring success is based on its ability to maintain and grow its exports, which currently represent a third of the global marketshare.
Some 80 per cent of respondents hope to drive growth by increasing overseas sales and exploring new markets with a focus on the Asia, the Middle-east, North America and Africa. Other countries of interest are Australia, China, Brazil and Norway.
Mr Gordon said: “Thankfully our survey shows that subsea companies are increasing their export efforts, exploring new geographic markets where their services and technology are in demand.”
More than 44 per cent of respondents said that the lower for longer oil price environment has led to the industry becoming more receptive to new ways of working and adopting different techniques and innovations. Almost 80 per cent of respondents are still investing in new technology and see this as an area of focus in the long-term to secure future growth.
Mr Gordon added: “The industry is more receptive to new ways of working and new technologies and we are starting to see the benefits of real collaboration towards reducing costs and driving efficiencies. It is encouraging that, against this backdrop, subsea companies are continuing to invest in the development of new technology.”
The majority of respondents believe that technologies which lower cost and risk, while increasing efficiency are vital for the future. Specific technologies, which will have most impact in the future, mentioned by respondents were subsea processing and storage, condition monitoring / inspection, repair and maintenance technologies, decommissioning technologies, data gathering and interpretation technologies.