Oil & Gas UK Economic Report 2014

7. The Supply Chain, Employment and Skills

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The UK’s Upstream Oil and Gas Supply Chain

of turnover in 2012, an increase of over 15 per cent on 2011 and £11.4 billion more than in 2008. In 2012, tax on these companies’ profits exceeded £0.6 billion and nearly £1 billion of payroll taxes were paid to the Exchequer. It should be noted that EY identified 3,078 companies directly involved in this supply chain. This excludes companies involved indirectly (such as in hospitality and infrastructure) and those who do not specifically disclose financial performance from oil and gas (such as legal, insurance, accountancy and banking organisations). Out of these companies, only those that were UK registered, had generated at least 50per cent of their turnover fromtheupstream oil and gas sector and had filed 2012 accounts with Companies House were included in the analysis; this came to 1,585 companies. Furthermore, the analysis is likely to be understated as companies that file abbreviated accounts (those typically with less than £6.5 million turnover) do not disclose information such as revenue, earnings before interest, tax, depreciation and amortisation (EBITDA), or headcount.

Introduction The UK’s upstream oil and gas supply chain supports the industry across all of its requirements, from the seismic acquisition of reservoir data, through E&A drilling, field developments and production operations to decommissioning at the end of a field’s life. As part of the industry-government Oil and Gas Industrial Strategy launched in March 2013, Oil & Gas UK, with the support of the Department for Business, Innovation & Skills (BIS), DECC and the Scottish Government, commissioned EY 13 to quantify the supply chain’s economic importance and its potential for growth. EY produced two reports, released in April 2014; the first measures the sector’s economic contribution based on 2012 figures, while the second is a market intelligence report focused on three selected sub-sectors. Economic contribution The report on the UK upstream oil and gas supply chain’s economic contribution 14 revealed that the 1,585 companies included in the analysis generated over £35 billion

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13 Previously known as Ernst & Young 14 The report is available at www.oilandgasuk.co.uk/knowledgecentre/economic-contribution.cfm

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ECONOMIC REPORT 2014