[Editor’s note: Opinions expressed by the author are their own.]

The recent talks between the OPEC+ alliance and G20 nations saw a temporary rise in oil price from an 18-year low of around $20/bbl. While the agreement by certain oil-producing countries to reduce supply by 9.7 million bbl/d helped to buoy prices in the short-term, the demand for oil and gas is likely to remain low throughout this global crisis with surplus stocks continuing to impede operational activities.

The cancellation or deferral of projects, many of which had just come back onstream after the downturn, was inevitable as E&P companies slash capex.

Neil Gordon
Neil Gordon

If the lock-down situation begins to ease in the coming weeks, the North Sea may be in a position to withstand the short-term damage. However, the main concern is ensuring that the supply chain is able to cope when activity resumes and projects now on hold come back onstream.

This backlog may stretch the already weakened supply chain to breaking point.

Businesses across all sectors are fighting for survival. Many oil and gas supply chain companies, who were only starting to recover after the downturn, with little or no cash reserves and significant debt, are simply not going to be able to stay afloat. The U.K. government’s business loans and job retention scheme may be a case of too little, too late for those in precarious positions.

Oil and gas has been designated a critical industry, much of its workforce key to ensuring that we keep the oil and gas flowing that, in turn, keeps the lights on, powering our homes and our hospitals. But this requires a robust supply chain and the five long, hard years of the downturn, have taken their toll on the supply chain’s resilience.

As an industry body, Subsea UK must provide leadership and value to subsea companies throughout this uncertain period. The former is difficult with so little clarity around the measures in place to support businesses and the uncertainty over the length of this lock-down and the ultimate damage it will have on the economy.

Fortunately, delivering value to our members is more achievable as it’s within our control. We’re currently improving various products and initiatives to deliver relevant support to member companies at this time. We’re also developing on-line platforms for running workshops and events so that our members can stay connected and benefit from shared experiences. We’re working closely with other bodies, including OGUK, to seek more clarity on available support and funding, and to make sure our members’ concerns are being heard at the highest levels of government.

To this end, we asked members to tell us their most pressing areas of concern. Initial feedback shows that these are, unsurprisingly, staffing, cash flow, projects being canceled or deferred and lack of clarity around government measures and guidance.

With the supply chain largely shutting down, companies are unsure when they’ll get paid, but also concerned about delays impacting on their ability to meet their contractual obligations.

The job retention scheme does not allow for a reduction in hours, but the drop off in activity means companies are finding it challenging to balance current resourcing and retention of staff.

Greater clarity is needed on whether U.K. companies can operate in workshops and factories, as well as traveling to go offshore.

Furthermore, we’re working with relevant organizations and the government to share and facilitate opportunities where subsea firms can use their expertise and technology to assist in the fight against COVID-19. The subsea industry has wide-ranging products and manufacturing capabilities that may be required, including oxygen for saturation diving, breathing apparatus, life support equipment, valves and control systems. One of our members, JFD has already announced a new revolutionary respiratory ventilator that can be used to treat COVID-19 patients in a hospital or pre-clinical care.

There is no doubt that our world, not just our industry, is going to be fundamentally different when we get out onto the other side of this global crisis.

As an industry, we need to start reflecting on how these changes are going to affect our business models, our workforce, our relevance, our ability to meet demand and our long-term sustainability. We need to ensure our bounce back drives the U.K. sector forward with our collective methods and innovative technologies as the bedrock for future resilience and central to maintaining successes around the world.


About the Author:

NEIL GORDON, CEO of Subsea UK, which is the industry body and focal point for the entire British subsea industry that aims to increase business opportunities at home and abroad for the sector.

Gordon initially studied business in Aberdeen then trained as a commercial diver spending eight years carrying out numerous diving assignments in the U.K. and Norwegian waters involving new construction projects, pipeline surveys, welding and inspection. He has over 25 years’ management experience in director and business development roles, combined with over 15 years in the subsea industry.

Prior to joining Subsea UK, he spent four years managing the National Hyperbaric Centre which included project-managing saturation diving operations and hyperbaric weld trials. He more recently developed the subsea safety training and consultancy aspect of the business, where he regularly lectured to subsea engineers and delivered a range of training courses both in the U.K. and overseas.

He has experience working in India, Middle East, Africa and Brazil and has worked with the oil and gas producers diving operations sub-committee on client representative training and competency for subsea projects. He was also an active member of the IMCA diving safety, medical, technical and training committee.