British energy-support services lured back to the Gulf

A North Sea oil platform east of Aberdeen in Scotland. Energy support firms based along the UK's eastern coast from Aberdeen to Great Yarmouth are reporting a rebound in orders from the Gulf after years of subdued activity caused by a weak oil price. (Reuters)

LONDON: British energy-support services firms are being drawn back to the Gulf after a near four-year Middle East work drought as the strengthening oil price spurs fresh investment.
Companies based in the main North Sea support clusters around Aberdeen in Scotland and Great Yarmouth on the English east coast are increasingly optimistic about their prospects in the Gulf as the stronger oil price encourages more energy investment in the region.
Wood Group, the Aberdeen-based FTSE 250 energy services company, has won a new multi-million dollar, five-year contract to provide engineering and project management services to Saudi Aramco to develop the Marjan oil field in Saudi Arabia’s eastern province.
Further down Britain’s east coast, support services firms based in Great Yarmouth in Norfolk, which have traditionally served gas rigs in the southern North Sea, are also looking at Gulf markets. “A lot of companies based around Great Yarmouth are doing business in the Middle East,” said Simon Gray, chief executive of the East of England Energy Group, which has some 350 business members in the area.
He points to the recent rise in the oil price as a spur to new international business for local companies and the potential for East of England firms to market their specialisms in the offshore wind sector overseas. The area is home to one of the UK’s earliest offshore wind farms at Scroby Sands.
Wood Group is managing the front-end engineering design and project management consultancy for its project in Saudi Arabia from an office in Reading in the UK and from its Khobar, Saudi Arabia and India offices.
The contract is part of Saudi Aramco’s multi-billion dollarMarjan Crude Increment Program; one of its oil and gas mega-projects designed to boost energy sustainability and gas production as well as diversifying the economy.
Wood has worked with Saudi Aramco for more than 30 years and last November the two groups signed a memorandum of understanding on Wood’s commitment to boosting opportunities for local workforces in the Kingdom.
Such commitments are becoming more important for British firms seeking to win work in the Kingdom amid increased Saudization targets which form part of the country’s Vision 2030 economic and social blueprint.
Wood Chief Executive Robin Watson said: “Our commitment to growing capability and capacity in the Kingdom will be demonstrated further on this contract, where we will focus on nurturing talent, providing employment opportunities and partnering with the supply chain.”
Energy services company Proserv, which is based in Aberdeen and is also currently completing a new £7 million ($9.7 million) technology center for its 183 staff in Great Yarmouth, has also been expanding in the Middle East.
Last year, Proserv officially opened its new facility at Dammam in Saudi Arabia’s Eastern Province to expand local manufacturing and project capabilities and provide services to onshore and offshore clients.
Proserv has recently undertaken a financial restructuring involving the conversion of debt into equity and driven by a need to cut borrowings following the downturn in the oil and gas sector over the past three years. CEO David Lamont said: “Our principle driver is to ensure that Proserv has the financial resources to continue operating unimpeded with our ongoing business as well as having the reserves to fund the many growth opportunities we see in our global markets.”
Meanwhile, improving oil and gas markets helped Weir Group, the UK-based maker of pumps and valves for mining and energy industries, last week beat expectations with a 36 percent rise in operating profits to £292 million and a 67 percent rise in its oil and gas orders.
Weir’s oil and gas services division is based in Dubai and it has opened a wellhead manufacturing facility in the Jebel Ali Free Zone.