Economic Report 2013

and activities associated with increasing oil recovery. Given the ageing infrastructure present on the UKCS and the number of brownfield projects, it is not surprising to see such a rise in revenues from operations. Revenues in exploration and production drilling grew slightly in 2011, but overall its market share in the UK has been decreasing. Revenues are consistently lower than those seen in the equivalent Norwegian sector, but costs in Norway are also consistently higher. Reservoir and seismic is a growing sector in the UK, but from a relatively small base. Profitability fell by 54 per cent in 2010, which was probably caused by the six month drilling moratorium in the Gulf of Mexico (GoM) between May and November, releasing spare seismic vessels from the GoM to the UKCS and depressing day rates. The supply of these vessels in the UK tightened in 2011 after the moratorium in the GoM was lifted, helping both revenues and profits to recover in 2011. Scottish Council for Development and Industry’s Report – Exports The Scottish Council for Development and Industry’s 2011-12 Survey of International Activity in Scotland’s Oil and Gas Sector 12 indicates that the Scottish supply chain’s revenues totalled £17.2 billion in 2011, growing by 5.8 per cent from 2010. International sales increased by 8.4 per cent to £8.2 billion in 2011, with North America remaining the main export market. Scottish exports to Norway, Angola, Nigeria and the UAE are also strong.

according to Subsea UK 13 . Subsea technology has become increasingly important, both in producing oil and gas reserves from the UKCS and in expanding exports. More than 800 companies are active in the UK’s subsea sector, with SMEs making up the largest proportion. Of that total number, seven per cent each generate more than £100 million of turnover a year, with the median turnover being £2.6 million. The 36 largest companies and their subsidiaries produce 70 per cent of subsea turnover in the UK and 77 per cent of the sector’s total output. The companies involved are spread across the country, although three quarters of the total revenue is generated in the north-east of Scotland (£6.7 billion). Around £614 million of output is concentrated in the east of England and £400 million and £126 million in the north-east and south-east of England, respectively. The remainder is spread across the east Midlands, the north-west and south-west of England, Wales and the rest of Scotland. The export of subsea goods and services from the UK is valued at £4.4 billion. Key markets are Norway, West Africa, North America and Asia. Engineering and manufacturing companies generate a substantial share of this revenue, as do service providers in disciplines such as diving, remotelyoperatedvehicleinspection,underwater construction, installation and surveying. On the back of this strong performance, 16,000 new jobs have been created since 2010, bringing the total number of people directly employed in the subsea sector to 53,000, with another 13,000 employed indirectly. Engineering, construction and diving roles account for 48 per cent of the workforce, with manufacturing accounting for 19 per cent of the total.

Subsea Engineering

A particular strength of the UK’s supply chain is subsea engineering which generates £8.9 billion in revenue for the economy

12 See http://www.scdi.org.uk/pi/2013/2011-2012Oil-Gas-Survey(May2013-SDI-SE-SCDI).pdf 13 See http://www.subseauk.com/4277/uk-subsea-sector-now-valued-at-almost-9billion-almost-50-growth-in-three-years

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ECONOMIC REPORT 2013

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