The Supply Chain

Overview of the UK supply chain

The UKCS supply chain can be defined as the UK & international network of directly connected and interdependent organisations mutually and co-operatively working together to support the upstream industry’s primary objective to competently and safely extract hydrocarbons from UKCS offshore licensed oil and gas reserves.

The activities of the supply chain cover the design, build, operational and decommissioning phases of offshore projects with regard to exploration and appraisal, reservoir management, wells/ drilling, facilities (platform and sub-sea infrastructure), health, safety and environment and decommissioning.

The related organisational range is vast – covering onshore and offshore contractors, suppliers and service providers, consultants and specialist advisers through to the end user clients (integrated majors and independent operators). Significant business flows exist to other non core sectors that are necessary to support the sector.

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. The following maps also help to give us an appreciation of the many product/ service lines that support the sector - Supply Chain mapping

There is growing recognition of the contribution the supply chain is making in its own right to the UK economy, whether measured in terms of employment, direct taxation or exports. Whilst the industry in the UK is a global leader in offshore and subsea engineering, it is still highly reliant on domestic business to provide the foundations for its international success. Currently, each £billion spent by the industry provides around 20,000 jobs across the supply chain. Our supply chain forms a key part of the wider energy sector in Britain and is well positioned to take advantage of the surge in global energy investment. Supply chain exports are increasing rapidly and at £4-5 billion per year now represent about a quarter of total exports of goods and services by the UK’s energy industry sector. More information can be found in Oil & Gas UK’s economic report 2008: link to Economic Report

The following case studies, focusing mainly on the areas technology, innovation and export, underline the expertise of our UK oil and gas supply chain.

PSN – exporting expertise

Fairfield Energy Limited – making best of use of standard contracts