Industry body Subsea UK unveiled a new study which shows that "The subsea oil and gas sector is now one of the fastest growing sectors of the UK economy," says the chief executive of industry body Subsea UK. David Pridden made this claim as he unveiled a new study of the sector today. "To meet global demand the UK subsea sector immediately needs 1,000 people and the number of new jobs that will be created by the sector in the next five years is anticipated to be 3,000."
Subsea UK commissioned global management consultants, Arthur D Little, last year to conduct a comprehensive review of the subsea market. Today’s findings are an update of this review to measure the change in market activity from 2004 to 2005.
Today’s findings reveal that the UK’s oil and gas subsea sector is now worth £3.35 billion. This compares to last year’s study when the UK market was valued at £2.7 billion and implies a market growth rate of some 23.6%, a growth rate substantially higher than the 5-10% predicted in the last study.
“Assuming continued growth at this rate, the UK market will be worth £4.1 billion in 2006 and £5.1 billion in 2007,” adds Pridden. “I do not believe there is any other UK industry sector growing this fast.”
The initial study found that some 800 companies were involved in the UK subsea industry and that it was the largest in the world with sales generated by UK subsea companies being well over half the global market.
Pridden says : “Subsea companies are adapting to higher than expected activity levels. The companies surveyed envisage that growth will continue at around this level and escalate in the following year.”
Interviews undertaken for this review with the main players in the industry would suggest that employment in the sector in 2006 will have grown to almost 30,000.
Half of the £3.35 billion in sales was derived from exports of products and services underlining the high international focus of this sector.
Pridden adds: “Export levels have risen by over 20% due to increased international activity, particularly in West Africa, and are expected to increase at a faster rate than the UK subsea market. This demonstrates the truly international potential of this sector and underlines the need for nationwide recognition of the sector so that it can maintain its global dominance.”
The study also showed that costs of service provision are rising sharply due to the unmet demand for engineers and the lack of suitably qualified professionals and the increasing costs of raw materials such as stainless steel, alloys, copper and plastics.
Pridden concludes: “Extracting the remaining world’s reserves will increasingly fall to the subsea industry – already almost 40% of UKCS oil production comes from subsea wells.
“The UK sector can only grow at the same rate as demand for its services and technology if key stakeholders such as government, education and financial institutions understand and support it. We face two fundamental challenges; those of people and technology. The global prize can only be won if we meet the demand for suitably qualified professionals and engineers and become faster at commercialising new technology. To do this we must create a global centre of subsea excellence in the UK focusing on developing new skills and new technologies. The industry and government must work together to achieve this before the window of opportunity closes.”
September 8, 2006