UK minister says service and supply firms must diversify

UK oil and gas sector supply chain companies must diversify into markets, including renewable energy, while increasing exports if they are to meet government-industry task force Pilot's target of securing �1 billion/year of new business by 2010, UK Energy Minister Peter Hain stated Tuesday.


LONDON, Mar. 22 -- UK oil and gas sector supply chain companies need to diversify into markets including renewable energy while increasing exports, UK Energy Minister Peter Hain said Tuesday.

He said such diversification was necessary if the government-industry task force Pilot is to meet its target of securing �1 billion/year of new business by 2010.

"The oil and gas industry in the North Sea is alive and well, and will continue for many years," the minister said, "but the prosperity of the UK supply chain relies not just on the buoyancy of North Sea activity but also on diversification and exports.

"Diversification and exports will help to broaden the base of the industry and maintain jobs. Companies can take great benefit from the opportunities identified in diversification and the environmental sector," Hain said.

The studies, conducted for Pilot by the Department of Trade & Industry, highlighted the renewable energy market as a "key area" for the crossover of skills and technology developed in the UK North Sea oil and gas industry.

Hain said the government's target of having renewable sources generate 10% of the country's energy within 10 years would speed the development of a range of technologies, "some (of which) have clear synergies with the skills that already exist in the oil and gas sector -- offshore wind turbines and wave energy in particular.�

Malcolm Brinded, managing director of the Royal Dutch/Shell Group's North Sea E&P arm, Shell Expro, and co-chair of Pilot's Industry Leadership Team, called the DTI studies "very encouraging."

He said, "These studies give a clear indication of the sectors which offer the UK's oil and gas suppliers the best chances for successful new business."

The waste management business, calculated at �3 billion/year, was identified by one of the studies as a rapidly expanding market, with resource management and recycling forecast as key areas for the future. "The emphasis is shifting towards a growth in innovative sorting, grading, and treatment technologies including gasification techniques and disposal of drill cuttings," noted Hain.

The minister pointed to Amec Border Wind, an outgrowth of Amec Services Ltd. active in the offshore wind energy market, as a model of a UK oil and gas service company "leading the way" into diversification for other sector contractors.

Mike Straughen, Amec Services's managing director, said, "Renewable energy, and in particular offshore wind, has three factors which make diversification into this business sector attractive to us. The opportunity for growth in a sustainable development area; moving away from a reliance on solely oil and gas; and a close fit with our existing technology and expertise."

The Blyth Offshore Wind Farm, the first of its kind to be built in UK waters and seen as a potential forerunner to larger developments in the North Sea, came online last December. The facility, home to two of the world's most powerful electricity-generating wind turbines, was built by a UK consortium comprising Amec PLC, Powergen Renewables PLC, Shell, and Nuon PLC.

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