Buoyant oil and gas pumps £35bn into UK economy

British oil and gas companies serving some of the world’s biggest fuel names like BP and Shell make up £35 billion worth of revenue to the British economy. That’s according […]

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By Vicky Ellis

British oil and gas companies serving some of the world’s biggest fuel names like BP and Shell make up £35 billion worth of revenue to the British economy.

That’s according to an extensive new survey of the UK supply chain which finds there is “strong demand” for its skills and products with international opportunities growing.

As many as 200,000 people were directly employed in the supply chain in 2012, with hundreds of smaller businesses all supporting the work of 14 major ones such as Amec and Wood Group.

The analysis from EY commissioned by trade body Oil & Gas UK maps out the sector from engineering, drilling and well design to marine and subsea.

Out of 3,000 firms which operate in the UK, the report narrowed its field to 1,585 depending on whether they were UK-registered, made at least half of its turnover from upstream oil and gas and if they had filed accounts in Companies House in 2012.

One of the experts behind the report, Alex Milward, Partner in EY’s oil and gas practice said: “There’s two parts to this: one is local demand which represents approximately 36% of the £35 billion, plus also the UK has a really strong reputation for engineering excellence and exports about 40% of that revenue to countries around the world such as Africa, the Middle East, Russia.”

The new work comes hot on the heels of a Bank of Scotland report at the start of April which suggests oil and gas firms plan to hire 39,000 more workers in the next two years.

Taken together the reports could add to the growing confidence of the British sector which looked to be in a slump just a few years ago.

But this week’s report also flags up fierce competition on the international scene with British businesses concerned by some barriers, from a lack of skilled workers to “inadequate” infrastructure.

At the report launch in Aberdeen yesterday, Energy Minister Michael Fallon agreed more could be done to help the sector.

He told ELN: “The report helps us, it maps out the strengths and weaknesses in the supply chain – it shows by the way that we have 15% of the world market in oil and gas activity, so that’s important.

“But we need to do more to beef up the skills involved, to attract more young people into the industry, to get them to do science and engineering courses at school and college.

“We also need to help the smaller suppliers, not just here at home but to help them when they’re abroad trying to win orders in some of these other explorations. Whether it’s off Brazil, deeper water off east Africa or west of Africa, wherever.”

He said detailed work would be taking place in the oil and gas industry council, a government work stream, to see what more can be done from access to finance or the way contracts are awarded.