North Sea still a shining example

Group Business Editor

Tuesday 7 August 2012

AMID the deepening economic gloom, it seems more important than ever to identify some of the bright spots which might help guide Scotland towards a brighter future.

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Ian McConnell

There are not many sectors which have been the subject of a steady raft of upbeat surveys of activity, investment, and pay levels, and news of corporate expansion, but the North Sea oil and gas sector is one.

Surveys have shown surges in drilling activity in the North Sea, and dramatic increases in planned investment. A raft of smaller players has joined the majors in exploiting this mature oil province, all backed up by a burgeoning services sector.And a whole host of oil services companies, big and small, has prospered not just in the North Sea but by taking technologies and expertise built up in Scotland around the globe.The average worker in the North Sea oil and gas industry earned around £56,000 last year – more than twice the average UK salary. It is little wonder, amid these high pay rates and general buoyancy of North Sea oil and gas-related activity, that Aberdeen has fared so much better than many other parts of Scotland in these recessionary times.However, it is important not to underestimate the benefits of North Sea oil and gas to other parts of Scotland. There are, after all, big operations serving this sector in other parts of the country, such as those of FMC Technologies which employ hundreds of people at Bellshill in Lanarkshire and at Dunfermline in Fife.Meanwhile, research by Professor Colin Mason, of Strathclyde Business School's Hunter Centre for Entrepreneurship highlights the potential for the North Sea oil and gas industry to help fuel the growth of Scotland's wider technology sector. In this regard, he highlights the many small and medium-sized technology companies around Scotland which are linked in some way to North Sea oil and gas. This research, commissioned by Scottish Enterprise and co-authored with Ross Brown, concludes that the Scottish oil and gas sector is a "very significant economic driver, both as a source of high-growth, high-tech companies and as a customer for tech firms in other industries".Nearly one-third of all Scottish-owned technology companies, the research found, were linked either directly or indirectly to the North Sea oil and gas sector.The research also notes that working with global energy companies in the North Sea has provided Scottish technology companies with access to other energy markets around the world.It is not surprising, therefore, that oil and gas figures heavily in a major expansion by taxpayer-funded Scottish Development International of its international network of offices and its staff located around the world.Opportunities in the oil and gas sector are highlighted by SDI, a partnership between the Scottish Government, Scottish Enterprise and Highlands and Islands Enterprise, in terms of its plans to establish a presence in Brazil, Norway and West Africa. SDI also plans to expand its presence in the Middle East, where it notes there will be considerable investment in the continued growth of the energy sector over the next 10 years.Chinese company Sinopec recently announced sizeable acquisitions which gave it significant exposure to North Sea assets – a move viewed as another international vote of confidence in the oil province. Meanwhile, companies such as Faroe Petroleum, one of the exploration pioneers west of Shetland, continue to ramp up its activities. Faroe announced last month that it had doubled its banking credit facilities from $125 million to $250m (£160m).The much-desired brighter economic future for Scotland, and for many other developed countries in the West, may still be some years away, with the UK's fiscal austerity programme likely to continue to choke off or dampen growth and with the eurozone debt crisis also weighing.However, in some ways, this makes the growth of North Sea oil and gas more important than ever in terms of providing well-paid employment in these very tough times. And the global success of Scottish companies working in this sector is a shining example to the corporate sector as a whole, particularly at a time when the weakness of the UK economy makes it more important than ever for businesses north of the Border with export potential to diversify geographically.

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North Sea still a shining example

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