Economic Report 2011

Future of the Supply Chain

During the past 40 or more years of operations to find and extract oil and gas from the waters around the United Kingdom, a world class supply chain has been developed, rooted within this country. However, with other nations bolstering their efforts to secure a major share of international business, it is imperative that the UK continues to compete wholeheartedly on the world stage. This will occur against a backdrop of declining but technology dependent UKCS production, and growing global opportunities.

The supply chain must fight not to lose its attractiveness, not only in the domestic oil and gas market, but also in the international arena which continues to drive ever growing exports. The supply chain will need to adapt to these evolving circumstances and, to do so, it will need to be encouraged and incentivised to maintain its momentum. This may entail:

  • moving beyond project specific decisions to strategic supplier/customer relationships;
  • encouragement of foreign inward investment for goods and services;
  • ensuring that, when SMEs and larger companies grow internationally, they see the UK as a place in which to anchor themselves, for excellence in project management, design, support, technology, R&D, skills, training and development;
  • customers pooling projects and developing new contract strategies and business models.

In order to meet this challenge, it is not solely the companies involved that must foresee these new demands; both the government and operators, the ultimate customers, must help create the right environment for the supply chain to rise to this global contest. There is little doubt that the standards which are applied on the UKCS are among the most demanding in the world. An ability to meet these puts our offshore oil and gas supply chain in a unique position to take advantage of these international opportunities.