Subsea firms suffering as oil price crisis bites

INDUSTRY: Sector struggling but remains vital to long-term health of North Sea

Ninety per cent of UK subseas companies have seen sales plunge in the past 18 months as the oil price crisis took its toll.

Research by industry body Subsea UK found that more than a quarter of firms had lost half of their business in the period, and a further 28% had seen orders drop by 30% to 40%.

Just 6% of respondents said they had felt no impact from the oil price collapse and 4% reported a rise in sales in the period.

Worryingly, almost 80% of companies operating in the subsea arena said they felt the major financial institutions had lost faith in the sector.

However, only a small proportion were looking to refinance or bring in new investment.

Subsea UK chief executive Neil Gordon, said the industry had been left reeling by the drawback on investment in the energy sector.

“The decline in oil price and subsequent industry-wide downturn has seen a massive reduction in CAPEX (capital expenditure) and OPEX (operating expenditure) 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,” Mr Gordon said.

“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.”

While the survey drew a picture of a sector in the doldrums, Subsea UK said there were some positives.

More than a third of respondents said the lower oil price environment meant the industry was now more receptive to new working practices and techniques.

Four-fifths also said they continued to invest in new technologies despite the downturn, viewing innovation as a driver of growth in the longer term.

Subsea processing and storage, inspection, repair and maintenance services, decommissioning technologies and data gathering were all marked out as potential growth areas.

Eighty per cent of respondents to the Subsea UK study also said they hoped to boost the bottom line by increasing overseas sales and exploring new markets.

Mr Gordon said it was vital that companies broadened their horizons.

He added: “Thankfully, our survey shows that subsea companies are increasing their export efforts, exploring new geographic markets where their services and technology are in demand.”

Picture: Newsline Media. Neil Gordon, chief executive of Subsea UK, said there were positives despite challenges for the sector.