UK to ‘miss out’ on subsea growth without ‘critical’ sector deal

Trevor Garlick, director at ONE and former BP North Sea president, gave evidence to the Scottish Affairs Committee
Trevor Garlick, regional resident of BP North Sea

The north east subsea sector could miss out on a multi-billion pound opportunity without “critical” support from the UK government, an industry veteran has warned.

Trevor Garlick, former North Sea boss at BP and a director at economic development body Opportunity North East (ONE), gave evidence to the Scottish Affairs Committee at Westminster yesterday for its inquiry into the future of Scotland’s oil and gas sector.

He said countries like Norway and Brazil are working on similar plans as the UK to greatly boost its share of the international subsea market, underlining the need for an oil and gas sector deal.

The UK oil and gas sector hopes to raise £500billion of revenue over the next 17 years through the supply chain capturing a larger share of export markets.

However Mr Garlick said timing of the sector deal, which would secure new centres of excellence for subsea, transformational technology and decommissioning, is “critical” as others could beat the UK to the punch.

He said: “What makes it critical is that other people are looking at the same ideas as us.

“We will definitely miss out on some of the subsea growth in the world because others will take it up.

“In our research around the underwater hub, we found that the Norwegians have something very similar already running called the GCE subsea node which does pretty much what we’ve described in our current design as to what we would like to do.

“You can see that if we don’t do it, it will be filled by others, and in Brazil they’re thinking of something similar.

“This idea of us having a world-leading position on the subsea and underwater industry is one that we all know about in the north east, but not everybody knows that in the country and sees ourselves as a world-leader, but we are a world-leader.

“We want to sustain that position and use that to get into more international growth.

“It’s like anything, if you wait there’s less impact and slower pace.”

Mr Garlick was joined on the panel by Subsea UK and industry regulator the Oil and Gas Authority.

Industry representatives have been drawing up proposals to try to secure a package of support from the UK government.

The sector deal is considered a key part of the industry’s Vision 2035, which aims to deliver an overall prize of £920billion of revenue for the UK economy over the next 17 years, with over half of that coming from the UK supply chain capturing a larger share of export markets.

Earlier this year, Scottish Secretary David Mundell told the Press and Journal there is “every possibility” the lucrative package could be finalised.

Mr Garlick was joined on the panel by Neil Gordon of Subsea UK and Stuart Payne, director of supply chain at the OGA who are also part of the team behind the sector deal proposals.

They told the inquiry that it was important the deal benefits the wider offshore supply chain, rather than just oil and gas, which could be serviced with the underwater hub.

The subsea base would build bridges with other parts of the UK with strong marine sectors such as Southampton and north east England which would allow the whole country to collaborate on problems set out by industry.

Mr Gordon, CEO of the trade body Subsea UK, said a space for strong collaboration between different subsea industries was “what’s missing” in the UK at present.

He said: “Connecting those spokes to this main hub is how we plan to deliver value.

“This is about getting the best, the sum of working together and making sure there’s no overlap or duplication

“It’s really to look at the white spaces, where are the opportunities to work together? To try to share some of the challenges and get some of the solutions to those challenges that we’re getting the best return for UK plc.”

Conservative MP for Banff and Buchan David Duguid, who is part of the committee, said the meeting shows there is an “undeniable case” for the sector deal.

He said: “The case for a sector deal for oil and gas is undeniable and I think we need a decision to be made at the earliest opportunity.

“If not, there is a potential risk that we lose the momentum that has built up in the north-east of Scotland during what remains a fragile recovery.

“That enthusiasm has built up, not just because of a sustained higher price of oil, but also from having the Oil and Gas Technology Centre and the Oil and Gas Authority based in Aberdeen.

“It is important that we follow through on all the recommendations from the 2014 Wood Report – and the sector deal will do exactly that.”