Supply Chain Structure

Until now there has only been limited research into the scale and scope of the supply chain, perhaps because the sector has not gained the recognition it has deserved. To begin to bridge this knowledge gap, Oil & Gas UK has developed a model which details the structure of the industry and the relationship between E&P companies and the supply chain. This model also builds on the work of Scottish Enterprise which has developed a detailed mapping of many of the constituents of the energy market supply chain. Oil & Gas UK intends to develop the analysis further during the coming year with relevant parties.

A simple overview of the industry is provided in Figure 9 which describes the main categories within the industry. These represent the E&P companies of various types, supported by a supply chain covering both core business activities and support services.

E&P companies active within the UK broadly fall into the following categories:

• Integrated Majors, who operate across the whole value chain from exploration and production through to refining and marketing,
• Independent Companies, predominantly focusing on exploration and production,
• Energy Utility Companies, who have an exploration and production arm active within the UKCS,
• Non-operating Companies, who have an equity share in assets operated by other E&P companies,
• Exploration Companies, currently or solely concentrated on exploring for new reserves.

The oil and gas supply chain has been segmented into the following categories:

• Reservoirs, covering such activities as seismic / data acquisition through to reservoir management,
• Wells, covering drilling and well completions,
• Facilities covering design, procurement, construction, operation, maintenance and decommissioning,
• Marine & Subsea encompassing marine/subsea engineering, construction and operations, diving and marine logistics,
• Support and services to the E&P sector, ranging from direct support such as asset management, catering and logistics through to Health, Safety & Environment (HS&E) services, venture capital, corporate finance and banking, legal and insurance services.

The industry can be organised in three tiers as shown in Figure 10:

• Tier 1 comprising the E&P companies,
• Tier 2 the main contractors and leading consultants supporting them who are most likely to contract directly with the Tier 1 companies,
• Tier 3 the subcontractors, suppliers of products and services, and their sub-suppliers; these are more likely to contract with Tier 2 companies, though some, particularly the more specialist companies, will contract directly with Tier 1.