Economic Report 2016 - Oil & Gas UK

46 / 84

ECONOMIC REPORT 2016
46
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) Integrated Majors Large/Small
Independents
Energy Utilities
Companies
Non-Operating
Companies
Exploration
Companies
Supply Chain
Categories Reservoirs Wells Facilities Marine and Subsea Support and Services
Tier 2:
Main contractors and
consultants
 Seismic data
acquisition
and processing
contractors
 Well services
contractors
 Drilling contractors
 Well engineering
consultants
 Engineering,
operation,
maintenance and
decommissioning
contractors
 Engineering
consultants
 Structure and
topside design and
fabrication
ÂMarine/subsea
contractors
ÂHeavy lift/pipelay
contractors
ÂFloating,
production, storage
units
ÂCatering/facility
management
ÂSea/air transport
ÂWarehousing/
logistics
ÂCommunications
ÂRecruitment
ÂTraining
ÂHealth, safety and
environmental
services
ÂEnergy
consultancies
ÂIT hardware/
software
Tier 3:
Product and services
suppliers
Components
Sub-contractors
and sub-suppliers
 Geosciences
consultancies
 Data interpretation
consultancies
 Seismic
instrumentation
 Drilling and well
equipment design
and manufacture
 Laboratory services
 Machinery/
plant design and
manufacture
 Engineering support
contractors
 Specialist
engineering
services
 Specialist steels and
tubulars
 Inspection services
ÂSubsea manifold/
riser design and
manufacture
ÂMarine/subsea
equipment
ÂSubsea inspection
services
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.