Opinion: To thrive abroad, strong domestic market comes first

Former energy minister Brian WIlson (front)
Former energy minister Brian WIlson (front)

I was saddened to learn of the death of Ken Forrest who, in my days as energy minister, was head of the oil and gas division of what was then known as Trade Partners UK.

That was several name changes and even more energy ministers ago!

Ken was the best kind of civil servant – unshowy, widely respected, and committed to a particular area of expertise where he made a long-term difference. He dated all the way back to the Offshore Supplies Office which did so much to ensure that the UK, and the north-east of Scotland in particular, developed a thriving North Sea supply chain in the early days of the industry.

I shared a lot of long-distance flights with Ken – the Philippines, Azerbaijan, Brazil spring to mind – and the objective was always the same; to secure work for British companies which would translate into jobs at home.

That entailed diplomacy more than salesmanship and personal relationships were a crucial part of the mix.

Seeing the same faces more than once matters and Ken provided that continuity.

Ultimately, it’s companies which must have the appetite to seek out overseas markets and win contracts. But in many of the world’s leading oil and gas provinces, where ministers tend to make the big commercial decisions, the role of government to government relations is also critical. Indeed, this possibly applies more to oil and gas than to any other sector.

By and large, this partnership has worked well for the UK. Last week, for example, when 5,000 industry participants from all over the world converged on Aberdeen for Subsea Expo 2018, it would have been noted that 55% of UK revenues from subsea activity comes from exports. That might be an appropriate occasion for a minute’s silent applause, to the memory of Ken Forrest.

Shortly after he retired in 2003, I appointed Ken to the new Renewables Advisory Board, the purpose of which was to support the Government in meeting its renewable generation targets and also in creating a strong UK supply chain. Ken’s experience was relevant in two respects.

The first, obviously, was that the Offshore Supplies Office remains the historic model for how government pressure could be applied in order to keep work in the UK and, hence, build the supply chain.

The second area of relevance lay in recognising the potential read-across from the oil and gas industry to renewables which, at that time, was much spoken of but not so much acted upon.

I think it would be fair to say that, as long as the North Sea was booming, there was something of an attention deficit when phrases like “technology transfer” were mentioned.

But times change and diversification is now the order of the day. Subsea expertise acquired in oil and gas can be applied to a whole range of other opportunities.

Neil Gordon, chief executive of Subsea UK, summed it up: “As our recent business activity review showed, the UK subsea sector appears to have weathered the storm of the downturn by increasing exports and moving into the offshore renewables space.”

So there you have it – exports and diversification, the two key factors which have kept many companies afloat through recent hard times while opening up exciting prospects for the future.

At present, the UK accounts for one-third of the world-wide subsea market so the challenge is to extend into that pre-eminence, which has been built up over five decades in oil and gas, into the other emerging opportunities.

If that is going to happen, then research and development will be the key. That has been recognised in the expanding role of the National Subsea Research Initiative, based in Aberdeen, which links companies and universities throughout the UK “to solve real global challenges identified by industry”. NSRI point out that other countries, particularly Norway and Brazil, are “investing heavily in subsea R&D”.

It is interesting to note the list of sectors in which NSRI is now matchmaking – oil and gas, offshore wind, wave and tidal, subsea mining, defence and ocean sciences all feature on its list of priorities. In each instance, there are diversification opportunities for companies which have historically been involved only in oil and gas.

Subsea Expo 2018 would have reflected that significantly shifting landscape.

Oil and gas continues to be by far the biggest draw but, last year, almost half of those who attended said that their interest was “multi-sector” with offshore wind by far the biggest complementary source of interest. That trend will undoubtedly be even more noticeable at this year’s event. As in the past, government and business need to work together to make sure that the flag is flown on behalf of the UK in every market where these diversified opportunities are available. But let’s not forget that to sell our subsea expertise to the world, it is helpful to have a strong domestic market to build on.

That is true of the North Sea and it is equally true now of the other subsea-related opportunities. For starters, and not least in Scotland, we need far more attention paid to ensuring that the rapidly expanding UK offshore wind industry can support more of our own companies, technologies and jobs.

Offshore wind offers enormous potential for UK companies to carry subsea experience, technology and innovation into global markets, precisely because the oil and gas history has bequeathed so many strong companies which are capable of diversification.

Once again, government can play its part by communicating the message where it matters that the UK is the world leader in subsea technologies – and intends it to stay that way.