Economic Report 2016 - Oil & Gas UK

ECONOMIC REPORT 2016

6. Supply Chain With the upstream sector experiencing one of its most challenging periods in history, there is considerable ongoing impact on businesses right across the supply chain. While 12 months ago many companies still had a backlog of orders to service, the reality is that many now face an emptying order book and are having to compete fiercely for available business. Some have been able to do so successfully and have grown their businesses this year, others have partially diversified into other countries or sectors or, in a limited number of cases thus far, have had to cease operations entirely. This section identifies both the financial and operational issues facing different areas of the supply chain.

Figure 33: Supply Chain Categories and Sub-Sectors

Tier 1: E&P Companies (End User)

Large/Small Independents

Energy Utilities Companies

Non-Operating Companies

Exploration Companies

Integrated Majors

Supply Chain Categories

Reservoirs

Wells

Facilities

Marine and Subsea Support and Services

Tier 2: Main contractors and consultants

 Seismic data acquisition

 Well services contractors  Drilling contractors  Well engineering consultants

 Engineering, operation,

 Marine/subsea contractors  Heavy lift/pipelay contractors  Floating,

 Catering/facility management  Sea/air transport  Warehousing/ logistics  Communications  Recruitment  Training  Health, safety and environmental services  Energy consultancies  IT hardware/ software

and processing contractors

maintenance and decommissioning contractors

 Engineering consultants  Structure and

production, storage units

topside design and fabrication

Tier 3: Product and services suppliers

 Geosciences consultancies  Data interpretation consultancies  Seismic instrumentation

 Drilling and well equipment design and manufacture  Laboratory services

 Machinery/

 Subsea manifold/ riser design and manufacture  Marine/subsea equipment  Subsea inspection services

plant design and manufacture  Engineering support contractors  Specialist engineering services  Specialist steels and tubulars  Inspection services

Components

Sub-contractors and sub-suppliers

On average revenues across the supply chain fell by 10 per cent in 2015, with a further fall of 21 per cent forecast this year.

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