Recently Subsea UK organized a very successful Subsea Expo exhibition and conference in Aberdeen. Despite the impact of oil prices on the market, Subsea UK’s event attracted attention of around 6,500 delegates and broke previous records with a 23% increase in attendees and hosted 200 exhibitors.
In an interview with Subsea World News, Neil Gordon, Chief Executive of Subsea UK, shared Subsea Expo’s success story and his views about the current situation on the market.
First of all, congratulations on the successful organisation of Subsea Expo. What are your impressions about the event?
Neil Gordon: This year’s show was one of the most successful ever with record numbers of delegates, exhibitors, sponsors and presenters.
Given the sharp decline in oil price and the challenges this brings to the industry globally, but particularly in the UKCS which is a high cost, mature basin, I think many people were surprised at the upbeat mood at Subsea Expo. This underlines several points for me. Firstly, the resilience of the subsea industry and its confidence in the long-term future. Secondly, the UK subsea sector is a world-leader and our companies are operating globally so are able to take a more global outlook on the industry overall and not just on the North Sea, where understandably things can seem to be more pessimistic. Thirdly, the interest in the event demonstrates the oil and gas industry’s reliance on the subsea sector to deliver efficiencies through game-changing technology and innovation, for which it has become renowned.
Considering the record-breaking attendance can you tell us about overall feedback you got from the exhibitors and visitors?
Neil Gordon: Subsea Expo is all about showcasing the best of UK technology and services in subsea and crucially for Subsea UK is the feedback from exhibitors. This year it could not have been more positive. This related largely to the fact that there was an increase in the number and quality of delegates attending which has translated into very real leads for companies exhibiting. More business was done than ever before with several companies reporting actual deals concluded as a result of the show. More representatives from the oil and gas operators attended than ever before and were either genuinely interested in the technology and services on display or were looking for specific solutions to current and future challenges.
We had several high-profile delegations from Africa, Brazil, Japan and Mexico, all of whom were impressed with what they saw and very keen to partner with UK companies in order to exploit emerging opportunties in their regions.
Proserv was named a company of the year, in your opinion, which companies do you see making a difference in 2015?
Neil Gordon: Proserv is a phenomenal UK subsea success story but all of the winners and finalists illustrated the depth and breadth of subsea expertise, talent and technology within the UK.
The focus on 2015 will be firmly on driving down the cost base and making opportunities more economical and therefore commercially viable. Subsea companies which can demonstrate services and/or technology which will deliver real cost-savings and efficiencies will be in demand.
Getting new technology or innovation over the line has always been challenging and time-consuming. The main barrier is the operators’ risk aversion which sees many of them happy to be second to market with an innovation rather than to win the race. With the end users actively looking for ways in which to reduce costs, they are more receptive to technology and innovation and we are confident that subsea companies with near to market technology will be able to trial it and commercialise it much more quickly.
New technology solutions were presented during the Subsea Expo. Do you see them as a potential game-changer in the tough year that the industry is facing?
Neil Gordon: Innovation will be key to driving real change whether it is in exploration, production, maintenance or decommissioning. While big ticket, game-changing science and technology will not be discovered and launched every month, what we are seeing almost daily are incremental improvements to existing technology, innovative ways of applying existing technology and techniques.
In your speech at the event you stressed the importance of NSRI for the UK’s subsea sector, how can that help companies tackle the challenging market?
Neil Gordon: As a first port of call for subsea technology that is led and driven by the subsea industry itself, NSRI will make it easier for companies to get their technology to market more quickly. Under the key technology themes, which have been identified by industry and are aligned to the challenges in the Wood Report on maximising economic recovery, NSRI will help companies find and build the teams needed to collaborate and deliver the technological innovation that is urgently required as well as the innovation for oilfields of the future.
Now that the tumbling oil prices have started to put pressure on the subsea sector, what should the industry be focusing during the time of extreme capex cuts?
Neil Gordon: In the North Sea, operators and the supply chain must work together on getting costs down while maintaining margins for the supply chain. There is recognition, even among the operators, that some behaviors and pressures placed on the supply chain have led to the spiraling costs and we must address these. This will ensure we have a sustainable industry which will continue to create jobs and generate wealth in the economy.
UK subsea companies must continue to focus on internationalisation, seeking out opportunities in target regions and developing effective export strategies so that they can spread the risk and deliver growth in a very tight market.
Again, it is innovation that will deliver a step-change and the oil companies must embrace new technology and work effectively with the companies developing new technologies in order to achieve implementation in the field much more quickly.
How long do you expect the current low oil price environment to affect the slowdown in projects?
Neil Gordon: We really cannot predict this with any degree of certainty. Some believe the oil price will start to recover at the end of this year, others think we haven’t seen it bottom out yet, even at $48. A report by Infield, presented at Subsea Expo, and using the order of subsea trees as a key market indicator, revealed that we were in for two tough years with things picking up in 2017.
Whoever you believe, it is certain that confidence will take longer to recover than commodity price.
Last but not least, what are your expectations for the Subsea Expo 2016, and do you expect that it can repeat the success of this years’ event?
Neil Gordon: We are confident that Subsea Expo will continue to grow in both size and stature. In 2016, we will be looking to attract even more operators and international visitors and to deliver a packed programme of speakers and topics that bring the whole subsea supply chain together to stimulate debate and address challenges head-on.