The UK leads the world in subsea, according to industry chief, David Pridden. The UK's oil and gas subsea sector is the largest in the world employing 27,000 people directly and generated $4.5 billion of sales in 2004, well over half of the global market.

Subsea UK, the representative body which champions the sector, commissioned global management consultants, Arthur D Little, to conduct a market study. Almost 800 companies from around the UK are involved in the subsea oil and gas industry and these were contacted for information.

"With limited global oil and gas supply, renewables being much further away than many want to admit and the likely issues over security of supply, it is vital that we recover the remaining reserves from the North Sea as well as tap deepwater reserves from around the world," said David Pridden, chief executive of Subsea UK.

"This will be increasingly achieved through subsea systems - almost 40 per cent of UKCS oil production now comes from subsea wells. Global production from subsea wells is also set to grow rapidly and the requirement for subsea technology and services in the marine renewable sector will dramatically increase over the next 10 years as well.

"The subsea sector is therefore of paramount importance to the UK and fortunately it is one in which we lead the world."

The data collected for the survey was based on the most up to date information available and is typically based on last year's financial results.

Pridden said: "Bearing in mind we are experiencing one of the most buoyant periods in the North Sea and the subsea industry in general, it is vital we recognize this industry and make sure that we continue our global dominance in a sector that is predicted to quadruple in size from $5 billion to $18 billion per annum in the next four years."

International brokers specialising in the offshore energy and subsea cable industries, Derrick Offshore, believe that the economic impact of the oil and gas subsea sector is even greater than this study suggests.

Sean Harvey, of Derrick Offshore, said: "Since the early days of exploration and development of the North Sea, the UK has been a major centre for subsea vessel ownership and operation. UK based companies are today operating subsea construction vessels in areas such as West Africa, Brazil, Gulf of Mexico, Middle East and South East Asia. As a result expertise and technological innovations developed in the North Sea are being exported globally. In the last 12 months the subsea market has experienced a marked upturn with vessel charter rates increasing by more than 100 per cent. Demand for subsea support vessels of all types continues to increase with even greater strategic importance being placed on control of these valuable assets. UK based shipowners and contractors are therefore playing a key role in supporting the growing subsea industry."

While the respondents represent the full subsea value chain, covering manufacture and supply of equipment from remotely operated vehicles to manifolds and wellheads and services for repair and maintenance to construction, design and project management, the figures do not include vessel charter information.

The turnover of the companies surveyed ranged from £100,000 to in excess of £200 million. The average turnover among respondents was £21.1 million.

The study also looked at capital and operating expenditure in the sector. The upstream operating companies spent around £1.25 billion on subsea related activities in the UKCS in 2004.

However, overseas business is critical for this sector. Of the $4.5 billion generated in 2004, approximately 50 per cent was exported.

Pridden believes that although there is the potential for the UK to continue to lead the way in subsea technology and services around the world, there is a real vulnerability in terms of international competition, research and development capability and the fact that too few UK companies attain global scale.

"The risk is that the UK may fail to exploit the next wave of emerging technologies and services. Subsea UK was set up to champion, harness and publicise the expertise and experience in the UK but we need key stakeholders such as the government, the education and financial sectors to understand the industry and support it, if it is to grow at the same rate as demand for its services and technology," said Pridden. "The hope is that this study, highlighting the importance, contribution and potential of the sector will help us lobby those stakeholders so that we can work together to capitalise on our current, but little publicised, advantageous position."

Arthur D Little is confident that the survey is very robust. Ben Thuriaux-Aleman ADL project manager said: "We adopted a rigorous, methodological approach and worked hard to remove any double counting and avoid overstating the importance of the sector. Despite this, the findings are very impressive. We obtained a high participation rate and had a built-in mechanism which allowed us to check that we had input from all the major players."

Subsea UK was established, with support from the UK’s DTI and Scottish Enterprise, as a focal point to promote the sector and maximise its opportunities globally. It provides a national forum for collaboration, diversification, commercialisation of technology and co-ordinated marketing at home and overseas. The organisation now has in excess of 120 members operating in the oil and gas, marine, defence, oceanology and renewable energy sectors.

For more information, visit www.subseauk.com