Subsea sector 'faces uncertainty'

Published on Monday 9 November 2009 21:06

BRITAIN'S £5 billion subsea sector is facing an uncertain future in the face of falling oil production in the North Sea and delays in projects being given the go-ahead.

A report, compiled by industry experts Douglas-Westwood and commissioned by Subsea UK, has revealed that the sector, which employs 40,000 people in the UK, is being cushioned from the impact of the recession by historical contracts and a backlog of subsea work.

But while the earnings are holding up, there are concerns of revenues being reduced due to project delays. Subsea construction companies have been forced to lay off staff in a continued drive for "cost-efficiencies" and integrated oil service companies are also suffering from project delays and decreased activity.

Subsea UK's chief executive, Alistair Birnie, said: "Given the efforts to bring down costs in a mature basin such as the UK Continental Shelf, subsea developments are critical to sustaining production here and increasingly around the world.

"Indeed, 43 per cent of UK production is now accounted for by subsea wells, and subsea goods and services are exported to the value of 2bn per year."

Malcolm Webb, the chief executive of Oil & Gas UK, the pan-industry trade body, called for government action to help to end the uncertainty facing the sector.

He said: "Having built on the wealth of subsea technology and expertise developed here over the last few decades of production, the UK is now considered a world leader in subsea engineering. The potential for major growth in exports exists with global demand for these goods and services rising around the world.

"However, this requires action from both government on tax and regulation and industry on efficiency and cost-control."