UK oil supply chain firms are diversifying into non-energy sectors due to Covid-19 and low commodity prices, according to a new report.
The Energy Industries Council (EIC) surveyed 40 supply chain businesses in the UK, with 72% moving into non-energy sectors such as infrastructure, industrial and pharmaceuticals.
However, the group said 90% remain active in oil and gas and 26% had moved into renewables.
Just 18% chose to “fully embrace” the energy transition, with firms “not yet able to convert this growing interest into contracts and wins”, although future opportunities are expected.
It comes as Oil and Gas UK chief executive Deirdre Michie told a Commons committee on Thursday that 7,500 people are estimated to have lost their jobs so far during this downturn.
EIC CEO Stuart Broadley said: “Arguably, today’s conditions are the most challenging we have ever seen, but this research shows that businesses are already adapting and are relatively resilient to this uncertainty.”
The EIC’s fourth annual “Survive and Thrive” report showed 11 growth strategies are being deployed this year, with diversification being the most popular, used by 49% of respondents.
Others include service & solutions (44%), innovation (41%) and collaboration (39%).
For the fourth year running, members perceived developing new export markets as the “riskiest growth strategy” with the slowest return to profit.
One of the other key findings of the 2020 report include that only 15% of the UK oil supply chain has exported their way out of a crisis.
Nearly half of those interviewed were small and medium-sized enterprises (SMEs).
Mr Broadley added: “It is always inspiring to speak to entrepreneurial business leaders about how they develop amazing new strategies to grow in challenging markets.
“Although businesses expect tough times ahead, leaders are investing in business development, R&D and their people throughout, and see diversification and innovation as key to survival in the short term, with many still seeing growth and new opportunities.”