Offshore Energies UK (OEUK) today warns that more action is needed from both government and industry to support supply chain companies to play a critical role in keeping oil and gas busy at the same time which help build the UK’s future low carbon energy systems.
OEUK’s new supply chain report calls on the government to provide a stable regulatory and fiscal framework that provides the supply chain with a predictable and attractive business environment to continue investing in the UK’s energy security.
It also calls on the government to work closely with industry to inform decision-making and policies that ensure suppliers have better visibility and certainty of opportunities and improve their ability to invest in technology development, skills and innovative ways to provide a net zero future.
The report features the hundreds of companies of all sizes that offer the range of products and services that operators need to run North Sea oil and gas facilities and whose skills help ensure the safety UK energy. The report comes at a time when OEUK is urging the sector to develop and maintain strong business relationships with the supply chain with priority areas such as the fair allocation of contractual risk and rewarding and encouraging innovative ways of working.
“Our offshore energy supply chain is an amazing and strategic national asset. By 2022, these companies helped the UK oil and gas industry deliver £28 billion of gross value added (GVA) to economy. Over the next decade, this sector is set to spend more than £200 billion, providing jobs for more than 200,000 people, as it expands low-carbon energy production.”
“A world-leading and diversified energy supply chain is being developed, but through engagement with our members and feedback from two surveys, we know they face significant headwinds on several fronts. Our sentiment survey revealed that there is a lack of confidence across the sector, with around a fifth of supply chain companies surveyed saying poor visibility of future UK projects is affecting their ability of planning and servicing activity in both the short and long term, an issue OEUK is working with industry to address,” Katy Heidenreich, OEUK Supply. said the director of chain and people.
The report describes how the UK’s energy supply chain ranges from large contractors with a global presence offering integrated oilfield services to small-scale local companies with specialist capabilities. Many companies are evolving to support emerging energies such as offshore wind, carbon capture and storage, and hydrogen production.
In 2021, the government recognized the critical role of the supply chain in the North Sea Transition Agreement, which aims to accelerate the shift to a low-carbon energy mix, reduce greenhouse gas emissions greenhouse and build a UK-based low-carbon supply chain with globally exportable expertise. .
Companies surveyed by the new report support the jobs of 80% of the 200,000 people employed in the offshore sector. This supply chain stretches across the UK from Shetland to Southampton and Great Yarmouth to Morecambe Bay, with low carbon energy hubs emerging in areas such as Teesside and Humberside.
“We are seeing businesses struggling to keep inflation under control and, domestically, we know that Brexit has had an impact, making it more difficult to import and export goods and take advantage of business opportunities in EU countries. More recently, businesses or all sizes of our sector have been affected by the uncertainty created by the increase in Energy Profits Tax (EPL) when we were already the highest taxed industry in the UK,” added Heidenreich.
OEUK’s report includes feedback from its Working as One survey, which assesses how the industry is treating its supply chain.
Based on the industry’s supply chain principles, which set out what good buying behaviors look like, the survey identifies areas where the industry can improve in areas such as prompt payment of invoices, fair allocation of risk and reward between buyer and supplier, as well as openness to innovation led by the supply chain. All three are the focus of working groups that OEUK has set up to ensure the industry addresses these issues.
“Our UK supply chain is critical to our efforts to deliver a carbon-neutral basin by 2050 and our new report highlights the scale of the challenge ahead. Both industry and government have a vital role in ensuring that this strategic national asset can continue to support current oil and gas energy demand while building the capacity to deliver a homegrown low carbon energy economy.”
“Failure to act now means we will see investment, equipment and resources diverted overseas, so the race is on. We need to make sure we work together to create a solution to this challenge to across the industry We are stepping up our work with government to ensure the UK is competitive as a destination for manufacturing and investment and stepping up efforts to help ensure our supply chain captures at least the half of the project activity ahead of us.”
“Strengthening our supply chain will enable us to develop expertise in engineering, manufacturing, services and technology to support the evolving low-carbon energy mix and create a globally competitive and internationally renowned energy supply chain. The time to act is now,” Heidenreich concluded.
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