£1.2bn sales increase for Scots oil and gas supply chain industry welcomed

GLOBAL sales made by the Scottish oil and gas supply chain industry have soared to a record 15.4 billion, despite the recession, it was revealed today.

Total sales last year by Scottish service companies increased by 1.2bn – a rise of about 8 per cent against a background of economic turbulence, according to a new survey by Scottish Enterprise and the Scottish Council for Development and Industry (SCDI).

The outstanding performance of Scottish companies in the oil and gas sector was mainly driven by international sales, which rose by 15 per cent to just under 6.6bn while domestic sales increased by 3.8 per cent to 8.8bn.

The continued growth in international sales – with Scottish companies operating in more than 100 countries – means that international business now represents more than 40 per cent of the total revenue. Ten years ago international activity accounted for just 27 per cent of sales.

Ian Armstrong, the SCDI’s manager for the North-east, praised the performance of Scottish-based oil and gas firms in what he described as a “challenging year”.

He said: “The growth in international sales was especially impressive and it is clear that, over time, the supply chain can be as important a wealth creator for Scotland and the UK as North Sea production. In recent years, many Scottish companies have successfully established their international presence by acquisition, joint venture or other means, often supported by senior management from the company’s Scottish headquarters.”

The report reveals that two markets – North America and Africa – now account for over half of international sales.

America and Canada top the international market for total sales at 35 per cent. And, last year, sales to the growing African market topped the 1bn mark for the first time. Other international sales were recorded in markets as diverse as St Lucia, Ecuador, Malta, Bahrain and the Ukraine.

Armstrong added: “It has been clear that the industry has moved quickly to try to tackle the issue of high costs across the supply chain, but also made a real effort to avoid unnecessary loss of manpower.

“This success has been nurtured in the North Sea and it is vital to anchor the supply chain in a sustainable and healthy domestic market. UK oil and gas can be a major source of energy and employment for decades to come.”

Adrian Gillespie, the director of energy at Scottish Enterprise, said: “The world has experienced a period of significant economic turbulence over the last 18 months, with countries in recession and many industrial sectors facing extreme difficulties.

“Against this background it is encouraging that Scotland’s oil and gas supply chain continues to record growth in international sales and make a significant contribution to the Scottish and UK economy.”

He added: “Oil and gas remains a key strength for Scottish and UK economic recovery, with the potential of the industry not just to move to international markets but also to diversify and support the development of new sectors including marine renewables and carbon capture and storage.”

The findings were also welcomed by Iain Smith, convener of the Scottish Parliament’s economy, energy and tourism committee, which has launched an inquiry into international trade and exports.

He said: “It is especially encouraging during the difficult economic climate that international sales in the oil and gas industry are reported to have grown by over 15 per cent to nearly 7bn.”