Ahead of the Labour government’s upcoming budget, anxiety within the UK’s oil and gas sector has quickly reached boiling point.
Even in advance of the budget, household names have made their intentions clear and reports of many leading operators looking to move away from the UK suggests a worrying trend.
If the country’s top producers – and earners – are open to jumping ship over the impending fiscal regime, imagine the impact changes to the Energy Profits Levy (EPL) or North Sea investment allowances will have on the countless SMEs that make up the supply chain?
Up and down the country, there are teams of immensely talented and experienced workforces who are reliant on a thriving and supported oil and gas industry. Not to mention the knock-on effect on all businesses that have a stake in the economic security of oil and gas – particularly within Scotland.
At OMMICA, this is something we know all too well, having found ourselves in the same situation as many SMEs may shortly experience too. Currently, over 60% of our sales are outside of the UK. Not long ago, the UK accounted for over 70% of our sales, yet in just a few short years, our trust in the local market has been decimated by changing attitudes.
Despite being proudly based in Edinburgh – where we manufacture, develop, and distribute our technologies from our HQ – we cannot rely on the local market. To survive and to find the opportunity to succeed and grow, we have had to look abroad. The international industry offered us a lifeline, but this is a luxury that not every SME will be afforded.
Even with our homegrown expertise, proven track record, and the chemical analysis solutions we provide to improve operational efficiency, there has been very little scope for us to lay solid foundations in the UK’s industry. As an SME that provides a specialist niche solution, the risk of prioritising the UK has simply been too great. Internally, we have the experience and technologies to make a positive difference in our national energy market, but that potential has unfortunately been squandered.
This too is the notable risk of incoming fiscal change.
The outcome is that we push away the country’s incredible talent to find opportunities elsewhere, to the benefit of the global market and detriment of local potential. Right now, we have the respect of international operators because of our expertise and technologies. If that isn’t being acknowledged by our government, then that reputation is at risk. Relationships and partnerships that have generated immense success on these shores will be tarnished and huge swaths of potential for energy security are going to be wasted.
The UK still can have an exciting future of energy security, but not if the leading minds to make it a reality are driven away.
Globalisation has presented us with opportunities to make new connections, develop internationally recognised solutions, and support global operations. This, however, is an opportunity that not every SME will have the ability to capitalise on. While many experienced leaders and innovators will look out with the UK to apply their craft and utilise their expertise, it’s likely many will struggle to make that transition.
The UK government turning its back on our established oil and gas industry has directly impacted OMMICA. We have had to make significant investments into our overseas capabilities with consistent – and costly – travel. The cost implication of global travel is a huge expense and one that not every company will be in a position to prioritise.
As a relatively smaller operation, the decision to invest in global travel wasn’t something we took lightly. It was a huge risk, but it was one that we absolutely had to take, and we are proud to show how it has paid off. Companies in similar positions shouldn’t have to scramble to look at international options, they should have faith in the market on their doorstep and those in charge of its future.
The renewables sector has immense potential, but that transition needs to be managed effectively and handled with care – something that is not being demonstrated at this current time. Here in the UK, we have an energy history to be proud of and we can only hope that this history isn’t cut short come Thursday. It’s critical that all those working closely in this industry, regardless of size and whether an operator or service company, voice our concern and the very real threat of lost opportunities for homegrown energy.
Duncan Baillie is the business development manager for OMMICA.
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