Subsea UK, the industry body representing firms dealing with subsea oil and gas business, has conducted a snapshot survey which shows a steep drop in sales, and recruitment drive, since the oil price collapse. Regardless, the UK subsea industry has maintained its investment in technology and looks to increase exports.
The organization said on Thursday that around 90 percent of respondents surveyed have seen a sales decrease in the last 18 months. Of those, 28 percent saw sales drop by 30-40 percent, and a further 28 percent have lost half their revenues with sales decreasing by 50 percent or more.
Only 6 percent of companies surveyed reported no impact on sales while an even smaller percentage, only 4 percent, have seen an increase in revenues.
A small percentage of only 5.7 percent are looking to refinance while 7.7 percent are actively seeking new investments.
Almost 70 percent of surveyed companies, according to Subsea UK, were not actively recruiting new workers while 28 percent were recruiting less in comparison to 2015. Recruitment as a whole has dropped and only 8 percent of surveyed companies are looking to employ more people than in 2015.
The subsea industry in the UK has been around since the 80’s, Subsea UK said, which has led to the creation of a £9 billion industry ($13 billion). Furthermore, the organization stated that survey covered its 300-strong membership which covers almost the entire subsea industry in the UK.
Increasing export efforts
Subsea UK chief executive, Neil Gordon, said: “The decline in oil price and subsequent industry-wide downturn has seen a massive reduction in CAPEX and OPEX budgets worldwide which have impacted on the subsea sector where we are seeing job losses and the collapse of companies, putting the UK sector’s enviable world-leading position under threat.
“The findings from our survey underline the negative impact on revenues and recruitment, but they also reveal positive signs of the sector adjusting and adapting to the lower for longer oil price environment which will ensure we are well-placed for the future.”
The role of the subsea sector, said Subsea UK, is to extend the life of North Sea operations. Gordon added that the sector’s enduring success is based on its ability to maintain and grow its exports, which currently represent a third of the global market share.
Some 80 percent of respondents look towards exports and exploring new markets with placing focus on Asia, the Middle-East, North America, and Africa while specifically targeted countries were Brazil, China, Australia and Norway.
Gordon said: “Thankfully our survey shows that subsea companies are increasing their export efforts, exploring new geographic markets where their services and technology are in demand.”
Subsea UK said that almost half of the surveyed companies stated that low oil prices led the industry to become more receptive to new ways of working and adopting different techniques and innovations.
Gordon added: “The industry is more receptive to new ways of working and new technologies, and we are starting to see the benefits of real collaboration towards reducing costs and driving efficiencies. It is encouraging that, against this backdrop, subsea companies are continuing to invest in the development of new technology.”
According to the survey, most respondents believe that technologies which lower cost and risk, while increasing efficiency are vital for the future, specifically subsea processing and storage, condition monitoring/inspection, repair and maintenance technologies, decommissioning technologies, data gathering, and interpretation technologies.