Oil and gas industry is still fuelling growth

Despite the gloomy forecasts, Scotland's energy sector continues to weather the storm, finds Ken Mann.]

SCOTTISH Enterprise (SE) sent me a news release at the start of the week that, while certainly not replacing the oil price bubble implosion with a new era of celebration, uncovers a useful point.


As we stand, and in spite of the small recovery in the barrel price of North Sea Brent Crude, would you believe a company based in Aberdeen that had only entered the oil and gas sector four years ago would now - of all times - be reporting doubled turnover and a 50 per cent increase in its workforce?


Well, it's true. Xtreme Business Solutions Ltd has recorded that seemingly impossible feat over the past three years, following a decision to diversify.


As this nugget landed in my inbox from the said government economic development agency, I wasn't surprised the Aberdeen-based network infrastructure specialist (that means it's in the IT business) has made the move into oil and gas - expanding its traditional customer base from the construction sector - with its assistance.


The figures bear testament- turnover increased from £1.7 million in 2011 to £3.8 million in 2014 and it now employs 48 people across its offices in the oil capital, Dalgety Bay, Portsmouth and Warsaw, Poland. It's a pleasant shocker in a number of ways. Admittedly, if you were taking a punt on oil and gas three years ago and from the perspective of a service supplier, risk might reasonably be regarded as manageable.


The black stuff of this game was still a darling of the Scottish and UK economies, after all.


That was before blotting its copy book, and its players' accounts, with varying shades of red as financial forecasts and headcount fell as the industry embraced what some maintain to be premature panic.


Whether that purported early panic, with its unsavoury impact prior to George Osborne's intervention, was real, imagined or conveniently talked up isn't the point now.


It's the timing of that SE release that reveals the dangers of dealing in generalities. The tabloids yelled we were virtually economically doomed, as was any employee's bank account that was even slightly connected with the industry. Which, to borrow one of my late father's favourite terms, is balderdash.


Coming well after the initial bad news of potential programme re-scaling, Xtreme Business Solutions managing director Graeme Duncan, explains: "It's hard to believe where we were just over three years ago.


"We've successfully reassessed our business model and grown as a result.


"We are entering an exciting phase in our development and moving forward we aim to capitalise on a number of significant international opportunities. We are working closely with Scottish Enterprise's international arm, Scottish Development International, and its GlobalScot network (sector grandee Scottish business ambassadors who are abroad, or known overseas, and are prepared to help open doors for growing Scottish businesses) to support our ambitious plans in this area."


The company's account manager at SE, Gordon Esslemont, added, with no pun intended: "Graeme and his management team's passion for growth has fuelled their success over the last three years and looking ahead they have their sights firmly on international opportunities.


"Working together, we're helping the company develop and implement an overseas strategy and are already working with our GlobalScot network to explore the option of creating a satellite office in Houston (Texas rather than Renfrewshire, of course)."


The firm's ongoing success in oil and gas is clearly about a core service need that continues more or less unabated. It will rely upon a traditional right service, right place, right time, right price and presumably right people mantra.


These aren't always easy facets to put in place at any point in time but this is by no means the only company continuing to do well out of North Sea-related activities.


Deals are being done in the small and medium-sized value/headcount business arena with, for example, some smaller firms - hit badly by exposure to specific areas of interest of the oil giants that are now being scaled back as a precaution - bought by larger organisations.


This is sometimes out of administration, because of their strategic fit with other engineering contracts.


Their specialised knowledge is transferrable not only to new sectors but also helps to lever and service new oil and gas contract opportunities overseas.


Jobs are being maintained as a result. The cycle of diversification and growth can then lead to new oil and gas jobs. And there has been recruitment by smaller exploration companies that flies in the face of what we've been led to believe to be the inevitable and permanent slide in employment levels previously associated with Aberdeen and Scotland's North East.


These are certainly times that require acute focus on the part of those involved in North Sea oil and gas services - in any capacity, direct or indirect. Jobs remain at risk - observers say there are other, typically smaller outfits, many of which have hitherto been regarded as well run businesses, who are floundering in these still difficult business waters with a solution to their immediate troubles too far away.


This announcement doesn't signal an incoming wave of hope for the oil exploration industry's concerned employees, but it is a beacon for underlying employment news in related sectors that understandably gains scant coverage as we continue to pour over the details of a painfully slow price recovery.


Source: Herald Scotland



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