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Supply chain needs to seize overseas opportunities

Being flexible and global is essential for the UK’s energy supply chain, says Stuart Broadley, CEO of the Energy Industries Council. Here he discusses how to investigate these opportunities, as well as his plan to cut the three-year-to-profit process to 18 months.
Stuart Broadley, CEO of The Energy Industries Council. Picture: EICworking

The UK’s energy supply chain is vulnerable, with too little UK work ahead. Even transition technologies will deliver too few opportunities. Yet looking overseas to develop new export markets has been the least popular growth strategy since the oil and gas crash six years ago, with only 15% of companies investing in building new markets abroad. 
 Stuart Broadley, CEO of the Energy Industries Council (EIC), says its database has $10 trillion worth of overseas projects with opportunities for UK companies. 
Multiple international growth opportunities beckon for UK energy businesses, but a blend of nervousness, lack of confidence and a three-years-to-profit process deters too many from exploring them. 
There are 13,000 companies in the UK energy supply chain, many with services, expertise and technology global clients are looking for. About 3,500 have more than £1milllion in annual revenue and more than 80% operate in the oil and gas sector. 
“There is not enough UK business to go around for these 13,000 companies. Companies need to focus on export and it is a big concern that they are not,” Broadley said. 
With nearly 80 years’ experience and strong relationships with major energy operators and asset owners around the globe, the EIC’s data stream has a list of 9,500 global projects covering all energy sectors, including large Capex projects. 
Twenty EIC analysts keep the list, which is broken into all scopes, up to date. Half the EIC team is based around the world – Kuala Lumpa, Rio, Dubai and wider – supporting businesses to set up internationally. 
Some companies share their premises as start-up, low-risk low-cost, offices. “We will help them find an agent, meet new people in the area, explore the market and set up,” explained Broadley. “What we love is when companies outgrow us and leave to set up their own offices, buying their own facilities.” 
EIC insight work builds project data for companies to use in their export business plans, and helps identify which projects to target. 
“A lot of what we do is government working and at board level across all energy sectors. We work with decisionmakers, finding out about early trends and investment decisions. Confidentiality is key.” 
Businesses can discover how to penetrate new markets and build relationships, legal and other issues they need to be aware of and how to navigate processes. 
“The EIC works with embassies and government representatives to help companies with advice and introductions and legal, cultural and business challenges that businesses need to go through to enter markets.” 
With strong relationships with key decision-making networks, the EIC supports businesses on their journey once they have targeted suitable projects. 
Its 130 events a year, now run virtually, aim to launch relationships. Key individuals and project teams are brought together with suppliers looking to move into their markets. 

Energy_storageThe Energy Industries Council has $10 trillion worth of overseas projects covering all sectors in its database. Picture: EIC
EIC insight work revealed that diversification was the number one target for companies, with 25% of oil and gas companies moving into renewables, and another 20% moving to non-energy areas like defence, space and sport, taking the view that oil and gas was too high a risk for all future business. 
Before the 2014 crash, developing export markets was one of the main areas of growth across energy sector businesses, many of those companies today draw 50% of their revenue from export markets. They are still strong but they are not developing new markets. 
Broadley said some businesses waited after the crash, hoping the oil price would return, reluctant to change. 
“When they had to change it took a lot of players out of the market completely. The companies that survived learned they could not get complacent again and they could not have so much debt. 
“The key financial outcome was companies had to be more entrepreneurial, to move faster and became more resilient, accepting the need to change to survive, and be less arrogant.” 
Companies hit badly by the 2014 crisis reacted too slowly, many had huge debts, and many were too small with low margin contracts. The 30% cuts demanded by operators to the supply chain led to fewer people in businesses, less income and lower profits in “tough, ruthless and bureaucratic markets. Businesses had to pick up projects they could profit from quickly,” Broadley said. 
“It takes three years to take first profits from going into a new export market and three years is a long time. Businesses need profits quicker. They aren’t growing fast enough to take three years to get to profit. This is the main challenge for the EIC and government. The first thing we are going to do is to address the three-year process to cut it to 18 months.” 
Covid-19 hasn’t helped the process. 30% of all projects, already down because of the oil price drop, were delayed because of the pandemic. 
Keeping up events is key. Last year, the delegates the EIC brought to the UK represented £800billion worth of projects. They met 900 of the 3,500 energy sector businesses. 
Looking ahead, the EIC’s aims and targets for 2021 are to: 
  •  Have a project list that is real and adapted to the Covid-19 environment. 
  • Bring decision makers to the UK, giving tangible access to businesses. 
  • Collaborate as an industry to help companies with finance and to cut the three-month-to-profit process to 18 months.