UK: How to achieve net-zero future in offshore energy supply chain

The report outlines the extent of the UK offshore supply chain which comprises the hundreds of firms that have underpinned energy security for decades by providing products and services operators require to run North Sea oil and gas installations.

It also reassesses the sector in light of the UK’s integrating offshore energies industry, as companies diversify into offshore wind, carbon capture and storage and hydrogen production.

Based on two major surveys including the Working as One and Supply Chain Sentiment survey, the report highlights the factors undermining business confidence and focuses on initiatives underway to address priority areas including improvement of contracting behaviours.

The report further includes what government support is needed to ensure the UK can build a UK-based all-energy supply chain which services the oil and gas sector and supports the shift to low-carbon energy.

Our sentiment survey revealed there’s a lack of confidence across the sector. Around a fifth of supply chain companies surveyed said poor visibility of the future UK projects is affecting their ability to plan and service activity both in the near and longer term, a problem that OEUK is working with industry to address

Katy Heidenreich, OEUK’s Supply Chain and People Director said.

Calls to action

#1 Government

• The government needs to demonstrate their ongoing commitment to delivering net zero by 2050, while recognising the role of domestic oil and gas production during this journey. For the supply chain to transform into new carbon energy, we ask the government to create an internationally competitive and level playing field to encourage supply chain innovation and sustained investment for a net zero future.
• The government must provide a stable regulatory and fiscal framework which provides the supply chain with a predictable and attractive business environment to continue investing in supporting the UK’s energy security.
• Government must work closely with industry to inform decision making and policies which ensure visibility and certainty of opportunity for the supply chain. This will help generate the confidence required for the supply chain to build the capability and capacity required to help deliver energy projects.
• Government should help ensure that the local UK supply chain accounts for 50% of the inputs into new energy projects. Leveraging the skills and technologies of new and existing UK companies will be in crucial to realising our net-zero goals.

#2 Industry

• Greater focus is needed on support for OEUK’s Supply Chain Principles from the whole sector.
• Purchasing organisations including operators & tier 1s must improve adherence to OEUK’s Supply Chain Principles to develop and maintain strong business relationships with the supply chain. Priority areas include ensuring the fair allocation of contractual risk and reward, paying invoices on time, and encouraging innovative ways of working.
• Operators must provide more visibility, predictability, and certainty of upcoming work scopes, otherwise supply chain companies will lack the confidence needed to invest in future activity.
• Industry should continue to strengthen its commitment to driving earlier, more open, strategic engagement between operators and supply chain companies. Through greater collaboration on demand planning, project scheduling and resource sharing, the industry can improve its competitiveness, and ensure the resources are available for the supply chain to effectively support long term energy supply.
• Building a competitive local supply chain, and achieving local content targets, will require investment in building supply chain capability and capacity ahead of the projects (minimum of three years pre-final investment decision).

explore more at uk’s report for offshore supply chain