Subsea UK’s latest business activity review reveals that the industry is generating annual revenues of £7.5billion, compared to £8.9billion in 2014.
The body which represents the country’s subsea industry also revealed that, despite the downturn in oil and gas, the subsea sector still supports around 45,000 jobs in the UK. This compares to around 53,000 three years ago.
Exports account for over half (55%) of annual revenues, while sales in offshore wind have risen from £770million in 2014 to £1.3billion today. Sales in renewables are also forecast to increase with around a quarter of large companies anticipating more than 20% growth in this sector.
Underwater technology, systems, engineering and manufacturing have been helping recover more hydrocarbons from the North Sea since the eighties. This expertise honed in the UK has led to the creation of one of the UK’s largest industry sectors which is now involved in defence, oceanology and now offshore wind.
Subsea UK, whose 300 members make up the bulk of the country’s subsea supply chain, conducts regular reviews of the sector. The body’s chief executive, Neil Gordon, said: “It’s clear that, at the time of our last review, the industry was still riding the crest of a wave with revenues of almost £9billion. The oil price crash and subsequent, prolonged downturn globally which led to the deferral or cancellation of major subsea projects, particularly in deepwater, has had a material impact on revenues and cost around 8,000 jobs.
“However, the subsea sector has appears to have weathered the storm by increasing exports and diversifying, particularly into offshore wind, where the skills and technology are eminently transferable.”
The largest export markets for the tier 1 subsea companies are Scandinavia, West Africa and the Gulf of Mexico. For SMEs, this picture changes with South East Asia being the primary export market, followed by the Gulf of Mexico and the Middle-east, Scandinavia and West Africa.
Respondents expect South east and Central Asia to become more important export markets in the future, along with the Caspian and the Middle-east.
Around 80% of large companies are expecting to grow exports in the next three years, with a third expecting export sales to increase by between 10% and 20% and a fifth by over 20%
Meanwhile, 65% of SMEs believe they will increase exports, with the majority anticipating growth of between 10% and 20% and over a fifth anticipating more than 20% growth in international sales.
Mr Gordon believes that, with global expenditure estimates for subsea vessel operations and hardware over the next five years around $141billion*, the UK can still claim to be a world-leader with around a third of that annualised, global oil and gas marketshare. Similar figures for the offshore renewables markets globally are not available.
He added: “Since the eighties, Britain has pioneered subsea technology and expertise and become recognised as the global-leader in subsea. I’m confident we can still claim to lead the way around the world but we still need greater recognition of subsea as one of the UK’s best performing industry sectors to help attract investment and talent and to work collaboratively with government on diversification, internationalisation, innovation and skills.”
In 2013/14, Subsea UK estimated there were around 800 companies operating in subsea across the country from the north-east of Scotland to the south-east of England. Around 20% of those have gone into liquidation, merged, been acquired or retreated from subsea operations.
Subsea UK’s membership, which was the survey base for this business activity review, makes up around 90% in monetary value of the whole subsea sector.
Subsea UK represents the entire supply chain from small, niche technology companies to the tier 1 contractors such as Subsea 7 and Technip, to the multi-national exploration and production companies.
The full report is available to view and download from the Subsea UK website - https://www.subseauk.com/9166/business-activity-review-2017.