Energy supply chain upbeat despite challenges posed by oil price fall

Firms weighed in on prospects for 2015 as the NOF Energy annual survey was published

Ian McClelland Photography Ltd George Rafferty, chief executive of NOF Energy
George Rafferty, chief executive of NOF Energy

Energy sector supply chain firms have expressed confidence they can meet the challenges arising from the collapse of global oil prices.

A major survey of NOF Energy members, many based in the North East, showed 92% believed the oil and gas sector would remain the most important part of their business heading into 2015.

This year’s edition of the annual survey, which charts the views of nearly 500 members, was produced in light of falling worldwide oil prices and a slowdown in capital expenditure by major oil and gas firms.

The general manager of Wynyard-based subsea manufacturers Ennsub, Scott Macknocher, said: “The slowdown in the oil and gas market was predicted, but the fall in oil price on top of this was not.

“Capital expenditure is always the first thing to be reined in, in a situation like this. It has also coincided with a time when big oil companies had come to the end of a period of “splurge” spending. Now those companies need time to prepare for the next push.

“Some projects might get pushed out further in anticipation of falling prices. I think next year will be challenging, but it’s the nature of this market to be cyclical. Companies in this sector are used to this, and many are flexible and nimble enough to overcome a slowdown. When they come out of the other side they will be stronger for it.”

Regional director of Washington-based oil and gas recruitment firm Oil Consultants, Gareth Allen, said: “We’re certainly confident of the opportunities in the market going into 2015. Oil Consultants have developed a number of new business streams – for instance in sourcing workers for decommissioning activity. If a firm needs personnel just weeks before a decommissioning project, we can provide for them.

“We’re also seeing sizeable demand for workers overseas. International firms want British engineers, particularly to help train and develop the local workforce.”

The NOF survey also look at the nuclear, renewables and shale gas sectors. Respondents said more offshore wind work has started to filter through to the supply chain, but there was a recognition of the need to secure more UK content on these projects.

Interest in the nuclear sector remained much the same, while the development of the shale gas industry, both in the UK and overseas was shown to be key to 60% of members.

In terms of exports, the US overtook Norway as the primary market for NOF Energy members – as 46% traded with the US. The United Arab Emirates, Brazil and Australia were also noted.

Respondents also identified four key challenges facing the supply chain in 2015. They included the ability to access decision makers in Tier 1 and 2 contractors and operators; raising awareness of products and services to target markets; recruitment of skills; and competition from within the UK and overseas supply chain.

George Rafferty, chief executive of NOF Energy, said: “The ongoing importance of oil and gas to our members is clearly reflected in our survey, but the current challenges facing the industry have not dampened our members’ ambitions.

“Their innovative, technology-led products and services and considerable industry experience will enable them to meet and exceed operator and lead contractor supplier requirements.”

Mr Rafferty added: “With exports forming a substantial element of our members’ operations and the increased interest in onshore gas developments, particularly in the United States, international trade will remain a core element of the support services provided by NOF Energy.”

NOF Energy said it would freeze its membership costs for 2015 in recognition of the challenges faced by the supply chain.

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