THE oil and gas sector is becoming increasingly important to the North East economy as firms in the sector benefit from a raft of new business wins, a new study suggests.
Research by NOF Energy indicates that the oil and gas sector is enjoying a resurgence in the region, especially as the UK’s industry capital, Aberdeen, struggles to keep up with demand.
NOF Energy, the business development organisation for oil, gas, nuclear and offshore renewable sectors, says its study also demonstrates how the industry and its supply chain is well-positioned to capitalise on any business opportunities as they emerge.
The industry supports at least 440,000 jobs across the UK, 15% of which are based in the North East, equating to 66,000 workers.
There are thought to be around 1,500 supply chain companies in the region which supply the sector while the 200 NOF Energy members in the region have a combined turnover of £2.5bn. Of these, 50 are involved in the subsea sector and have a combined turnover of over £1bn, supporting 10,000 jobs. And far from being a sunset industry, the UK oil and gas industry – which currently satisfies 73% of UK energy demand – has the potential to satisfy close to 50% of UK demand in 2020 if the current rate of investment is sustained.
Chief executive George Rafferty said: “Research among our member companies shows how robust the oil, gas and offshore industries are in the region and how they are making a significant contribution to the economic wellbeing of the North East.”
He cited a string of recent contract wins, profit announcements and successful projects including:
Exports at BEL Valves, of Newcastle, now account for more than half of the company’s £60m turnover with projects in Africa, Australia, the Gulf of Mexico, the former Soviet Union, and the Far East.
Nortech Solutions, based in Stockton, has been awarded a £2m contract by EnQuest, of Aberdeen, to extend the operating life of an offshore North Sea platform.
Houghton International, of Newcastle, an electro-mechanical engineering specialist, has completed its largest project on behalf of a leading international provider of offshore contract services for oil and gas wells.
Mech-Tool Engineering, a global fire, blast and noise protection products manufacturer, has celebrated one of the most successful years in its 43-year history. Due partly to winning and delivering a major project off the coast of Russia’s Sakhalin Island, the Darlington firm recorded turnover in excess of £16m and profits of £600,000.
Revenues at IHC Engineering Business, of Stocksfield, Northumberland, will grow by 25% this year while its workforce will increase by 30 thanks to the oil and gas sector. It is working on two major pipeline lay towers, which are taller than the Tyne Bridge, and which will take more than 400,000 man hours to complete.
Mr Rafferty added: “The oil, gas and offshore sector, which supports thousands of jobs and generates much- needed income for the region, also has the capability and potential to exploit any emerging new markets and opportunities.
“This is good news for the region, its economy and future job creation.”