Research and analysis

Global offshore upstream decommissioning export strategy

Published 8 March 2023

Upstream Decommissioning Export Strategy Group foreword

It has taken a generation of innovative engineering and commercial solutions to establish the UK upstream oil and gas industry, with activity that produces oil and gas from onshore, shallow water and harsh water environments. However, exploration and production of oil and gas in the United Kingdom Continental Shelf (UKCS) is now in decline and a number of oil and gas assets are reaching the end of their design life. When the infrastructure that supports this industry reaches the end of its economic or technical viability, it must either be repurposed or decommissioned. Under the regulations and obligations that the sector agreed to upon its inception, this means that assets must cease production, be made safe and either removed or left in a manner that is deemed safe to people and the environment. Progressively more UKCS oil and gas infrastructure has been taken offline and safely decommissioned.

Essential skill sets and technical capabilities have been built up throughout the era of the North Sea offshore industry. As one of the first offshore basins, the North Sea is ahead of other locations regarding decommissioning, meaning that the skills, competences, techniques, and knowledge gained in the North Sea now have exportable value in other markets. The Department for Business and Trade (DBT) and its sectoral and governmental partners are keen to encourage members of the UK supply chain to maximise these opportunities.

Within the UKCS, decommissioning expenditure is predicted to reach a peak of more than £2.5 billion per year in the next 2 decades, as valued by the North Sea Transition Authority, formerly the Oil and Gas Authority^{[footnote 1]}, equivalent to approximately 10% of gross upstream expenditure. Significant lessons have been learned and efficiency gains made, reducing the cost to the taxpayer and industry alike while improving environmental performance. Decommissioning is one of the drivers of energy transition plans and, as society makes a move towards a low carbon economy, the volume and complexity of upstream decommissioning will increase, sustaining jobs, extending economic benefit and reducing the environmental impact of the industry.

This document reflects the first stage of the process for developing export support for UKCS capabilities and outlines recommendations made by various stakeholders. It is focused on actions that will support the further export of these capabilities, in what is likely to be a multi-decadal era of global activity in the decommissioning space.

Executive summary

Strategic ambition

Our strategic ambition is to position the UK as a world leading hub for upstream decommissioning through:

• identifying exportable UK supply chain strengths
• identifying markets where upstream decommissioning offers significant potential for UK expertise and technology
• identifying actions and enablers that will encourage the UK supply chain to export its expertise

The opportunity in global upstream decommissioning

There is a world of opportunity with the predicted increase in global decommissioning activity, matched with the UK’s export potential and capabilities within the energy transition. The Energy Industries Council (EIC) estimates the global value of upstream decommissioning to be worth at least USD200 billion (2021 to 2040)^{[footnote 2]}. Meanwhile, with decommissioning costs falling year on year, the sector will become increasingly attractive to overseas markets.

North West Europe currently dominates global decommissioning activities; with estimates of 33% of global offshore decommissioning spend in the years 2021 to 2030 being in Europe^{[footnote 3]}.

Outside of these regions, considerable spend is also forecast for the Gulf of Mexico (USA), Brazil and South East Asia, (namely Thailand, Indonesia, Malaysia, Brunei and Vietnam), all of which are classed as priority targets for the purposes of this strategy.

Annual data collated by the North Sea Transition Authority and published by Offshore Energies UK records that well abandonment remains the key spend item in decommissioning, worth around 50% of the total spend, with remaining expenditure split across the other elements of the standardised OEUK Work Breakdown Structure^{[footnote 4]}.

Sector specialist trade body, Decom North Sea (DNS) consider the proven experience of the UK supply chain as having considerable prospective knowledge transfer and economic value, with particular overseas demand for services including:

• well abandonment technology and solutions that reduce rig time and cost
• optimised project management and engineering solutions that improve project delivery and accurate cost management
• specialist equipment and techniques for the clean-down of equipment and infrastructure, be it topsides or subsea
• proven, safe and environmentally effective onshore dismantling and waste management.
• management, including that for the handling of hazardous materials, including naturally occurring radioactive materials (NORM)
• specialist capabilities for survey, recovery, possible reuse
• dismantling of subsea assets and infrastructure

Recommendations

Recommendations include:

• mapping UK capability against international opportunity to identify opportunities
• developing country- and region-specific support
• developing promotion of UK capability
• considering how financial support might help to increase opportunities for UK companies
• the development of bilateral cooperation engagement to encourage international cooperation

Success stories

We can see the strength of the UK supply chain and the global opportunities that are out there through CessCon Decom Ltd’s export win in Brunei.

Department for International Trade (DIT) support included introductions to the high-level Brunei inward delegation to Scotland in 2019, a DIT follow up visit to Brunei in January 2020 to further press the case for UK suppliers, several virtual discussions with Brunei energy authorities, and advocacy from the British High Commissioner and his team in Brunei.

Offshore decommissioning forecast global spend 2021 to 2030^{[footnote 5]}

IHS Markit forecasts for offshore global decommissioning spend from 2021 to 2030 suggest that regionally, the bulk of spend will be in Europe (33%) and APAC (23%) with North America (17%) and LATAC (13%) closely following. Africa is expected to comprise 10%, with Russia at 3% and the Mediterranean/Middle East 1%.

Upstream decommissioning – an introduction

Upstream decommissioning is the process of terminating oil and gas operations at an offshore platform once it has reached the end of its producing life.

It involves removing or repurposing infrastructure when the cost to operate it exceeds the revenue it generates.

In simple terms, upstream decommissioning involves 3 main steps which include:

• dismantling the production and transportation facilities
• plugging and abandoning the well
• restoring the producing area to its original state

The extraction of hydrocarbons is a complex process, requiring numerous levels of personnel and environmental protection to minimise risk. Upstream assets, particularly those located in an offshore environment, must be both a place of work, a refuge from hazards and a point from which oil and gas can be drilled to, extracted, processed, and exported. These sites consume considerable energy and have associated emissions of greenhouse gases, varying according to whether they are land-based or in shallow, harsh or deep-water locations.

Once an asset has reached a point beyond which it can no longer produce hydrocarbons on an economic or technical basis, it is typically retired from operation (cessation of production (CoP)) and decommissioned. This phase of the asset lifecycle requires significant technical, commercial, and regulatory planning and can take several years to execute and close out.

Within the UKCS, steps were taken to ensure that a common descriptor of decommissioning activity was available to all in the market. Referred to as the ‘Decommissioning Work Breakdown Structure’ (WBS) and published jointly by several private and public sector bodies with the aim to define contracting strategies and the apportioning of work to contractors. There are 11 components within the WBS, including project management, well abandonment (which is an important safety and environmental deliverable), and removal, dismantling and end of life monitoring. A significant and mature supply chain has evolved in North West Europe and the UKCS in response to the demand for decommissioning services. In most cases this draws upon entities that provide related services to the upstream segment, however a small number of niche providers specialise solely, or largely, in decommissioning activity.

Background and government policy

The government call for evidence on the UK’s offshore oil and gas decommissioning industry

In March 2019, the government launched ‘Strengthening the UK’s offshore oil and gas decommissioning industry, call for evidence’, to identify potential opportunities arising from the development of a world-leading domestic upstream decommissioning industry.

Its 2 central themes were:

• how can the UK upstream decommissioning industry further improve its ability to serve the UK market, support the ‘Maximising Economic Recovery (MER) UK Strategy’ (now renamed the OGA Strategy) and reduce the overall costs of upstream decommissioning?
• what can be done to encourage the domestic industry to export its upstream decommissioning expertise abroad and position the UK as a world leading upstream decommissioning hub?

The Call for Evidence sought views from across industry and support bodies. Responses highlighted the need for a better understanding of the upstream decommissioning pipeline to allow industry to align strategy and investment plans, and drive innovation in related technologies and business models. Tracking and evaluating immediate, mid- and long-term opportunities in overseas markets will help the UK supply chain understand where opportunity exists and enable them to develop suitable market entry strategies. While it reported that as much as 60% of the supply chain is already exporting upstream decommissioning services, the Call for Evidence accepted that more could be done to ensure that UK businesses are incentivised to develop new export capabilities in new markets. In support of this, a further call was made for additional investment in the UK decommissioning sector, to build on previous investments such as the National Decommissioning Centre. This would contribute to and further enhance the competitiveness of the already established UK supply chain expertise.

Building on these concepts, the Call for Evidence pushed for a more strategic approach, targeting optimum opportunities, utilising both industry trade bodies and UK international diplomatic capability to identify and target optimum countries, markets and projects.

An overriding message was that export success will be underpinned by domestic expertise. Government, regulators and industry should make sure the sector excels in the UK market, is competitive in the North Sea and becoming ready and motivated to invest for targeted international export.

The UK government policy context

Publication of this strategy follows the UK’s COP26 Presidency, which was used to raise ambition and secure action from all countries – with over 90% of the global economy covered by a Net Zero target, up from 30% 2 years ago. COP26 ended with agreement to the ‘Glasgow Climate Pact’ – which aims to cap global warming at no more than 1.5°C, and to finalise outstanding elements of the Paris Agreement. During the last 2 years the UK policy context for oil and gas decommissioning has rapidly accelerated as demonstrated by workstreams including:

• UK-wide Net Zero obligations enacted by law via the Climate Change Act (2018) and further tightened via the Sixth Carbon Budget (2021)
• publication of the Ten Point Plan for a Green Industrial Revolution (2020), in which the government aims to support green jobs and accelerate Net Zero actions
• commitments made in the Energy White Paper (BEIS, December 2020) by which the government commits to transform the UKCS into a Net Zero basin by 2050
• in support of the above, and by means of the North Sea Transition Deal (NSTD), the upstream sector voluntarily committed to achieve 50% local UK content across the lifecycle for all related new energy transition projects by 2030, as well as in oil and gas decommissioning, and 30% for locally provided technology
• revision of UK export support services to provide no new direct financial or promotional support for the fossil fuel sector overseas, including official development assistance, investment, export credit and trade promotion activity. Notable within this however are exemptions to support health and safety performance, clean energy projects, or those associated with a humanitarian response (HMG support for fossil fuel industry)
• formal evolution of the MER UK Strategy (2016) to a North Sea Transition Authority (NSTA) Strategy (2021), in line with the above. This furthers the obligation to ensure maximised recovery of petroleum resources along with the need to assist in meeting the Net Zero target. This principally relates to the reduction of greenhouse gas emissions and supporting carbon capture, utilisation and storage projects (CCUS)

By contributing to and supporting the above initiatives, trade bodies such as DNS, EIC, GUH and OEUK all point to the value of lessons learnt in UKCS decommissioning, whereby overall cost, efficiency and environmental regulation and impact have been greatly improved through time. As the energy transition impacts global energy production and consumption, these lessons and the techniques that accompany them become increasingly valued, with decommissioning widely viewed in the industry as needing successful remediation of upstream legacy assets across the globe and will be an important enabler towards alternative energy production.

Methodology and findings

To consider how to develop an Upstream Decommissioning Export Strategy, a Strategy Group was formed comprising DIT officials, and stakeholders from trade associations, business support networks, other government departments and regulators who are closely involved with or have an interest in the upstream decommissioning industry. The group worked toward developing an evidence base on which to develop recommendations for future action.

The framework used to gather evidence

Potential target markets

In the absence of readily available and transparent global market data for decommissioning, the Strategy Group compiled a list of target markets, based upon information available in the public domain. DIT and the EIC were then tasked with further analysis, leading the Strategy Group to determine the following prioritisation:

• Europe: Norway, Denmark, the Netherlands
• South East Asia: Brunei, Malaysia, Thailand, Indonesia, Vietnam, Australia
• West Africa: Nigeria, Ghana, Angola
• South America: Brazil, Mexico
• India

Drawing on this list, DIT global officials in relevant markets provided deeper insight into potential opportunities offered within individual markets and regions, with the resulting findings subject to review by the strategy group.

DIT’s analysis of responses to a questionnaire from a dozen overseas UK diplomatic missions where there is potential for sizeable decommissioning activity over the next decade, showed some alignment with industry analysis by EIC of the level of decommissioning spend in the next decade. The questionnaire focused on 3 core areas:

• the political and regulatory environment
• economic and market activity
• engineering and technological capability

When providing additional local commentary, respondents were asked to consider:

• what is the expected scale of decommissioning opportunities?
• would respondents have the bandwidth to be able to support work in this area?
• what information is readily available?
• whether respondents are familiar with UK supply chain companies already operating in their market?

To see further information on potential target markets please see Annex 2.

Further analysis will need to be undertaken in these (and other) markets to better understand:

• local supply chain capabilities and gaps
• technical scopes of work expected for specific decommissioning projects
• expected budgets and financing models
• strength of regulatory frameworks and alignment with UK standards
• potential for any bilateral cooperation agreements

However, it is clear there is a big opportunity for the UK decommissioning sector.

There were also a number of general observations made by members of the strategy group highlighting that:

• decommissioning activity is often driven by financial drivers including commodity pricing, balance sheet considerations and national licencing requirements relating to asset retirement. This means that it can be difficult to forecast the timing and scale of activity
• reporting of future activity by operators and governments is frequently opaque and subject to complicated legislation and the commercial need to retain confidentiality
• acceleration of the energy transition means that both assets and capital are now subject to potential redeployment. In some cases, this is leading to accelerated decommissioning and in others, delayed activity

Allowing for the above, and despite the mature state of decommissioning in the UKCS and in the North Sea, it is acknowledged by industry members and government bodies that there is a lack of detailed market intelligence on which to prioritise export effort. Regardless of the initial findings made above, the Export Strategy further recommends a number of actions intended to improve the targeting of effort, namely relating to the use of NSTA Pathfinder for opportunity tracking and for DNS and OEUK to provide informed opinion on opportunities.

The findings from the responses received from diplomatic missions were:

Country	Scale of opportunity	Existing UK engagement	Competitive landscape
Australia	High	Strong	Level playing field
Brazil	Medium	Strong	Level playing field
Denmark	High	Strong	Level playing field
India	Low	Strong	Level playing field
Indonesia	High	Strong	Level playing field
Malaysia	Medium	Reasonable	Level playing field
Nigeria	Medium	Strong	Level playing field
Norway	Medium	Strong	Level playing field
Mexico	Medium	Strong	Strong UK supply chain presence
Thailand	Medium	Limited	Level playing field
Vietnam	High	Reasonable	Level playing field

Constraints to market access

Respondents identified several areas where UK access to global opportunities could be enhanced through industry and/or government support:

• UK government overseas diplomatic missions’ assistance will be important in accessing decision makers within non-UK companies, who could otherwise be difficult to access
• diplomatic efforts to clarify and, where possible, mitigate negative local conditions, which even if properly understood, may limit UK export capability by providing either specific restrictions, or a challenging working environment (examples include prescribed local content, strong unions, unpredictable cost burdens, for example, unfamiliar contracting approaches, withholding revenues and local taxes), and restrictive national regulatory regimes)
• based on experiences in Thailand, Malaysia and Brunei, a major inhibiting factor is access to appropriate financing; UK Export Finance (UKEF) support has the potential to help overcome this issue
• help in developing deeper understanding of local regulators’ guidelines in their concessions or production sharing contracts (PSCs), in relation to liabilities and commitments which are necessary for decommissioning to take place, but often unclear
• support in understanding and mitigating issues such as challenging working environments including:
  • language and cultural barriers
  • decision criteria
  • misalignment (for example, local standards differing from UK requirements and corporate standards)
  • political instability
  • low cost rather than total value approaches driving tender processes
  • availability of cheap local labour
  • a low demand for higher technology solutions
• where there is an established supply chain, UK companies struggle to gain traction, underpinning the need to look at emerging, rather than established markets for export opportunities
• UKEF support can help UK companies gain greater access to the contract bonding and working capital facilities required to pursue global opportunities.

Actions to support the above findings are captured further in the action plan.

Supply chain sentiment

In addition to the market analysis outlined above, DNS, EIC, GUH and OEUK undertook a joint survey to gauge UK supply chain interest in overseas decommissioning activity and current track record. This built on a previous survey conducted in 2018. The joint survey outlined the opportunity for growth in the UK supply chain to further enhance capability.

It is intended that this survey will be repeated in the future, as part of the recommendations of this Export Strategy. Respondents comprised of 55 supply chain members and 15 operators, reflecting all the aspects within the decommissioning WBS.

The main considerations raised were:

• strategic value given export potential of decommissioning activity
• an understanding of sentiment in export markets towards decommissioning
• quantification of current levels of export activity

To see further information on supply chain sentiment please see Annex 3.

Action plan: recommendations and implementation

This report is a call for action issued under the auspices of DBT, on behalf of the industry bodies who have been jointly involved in developing the strategy. The following recommendations for future actions are suggested to help position the UK supply chain to win its share of global opportunities, helping further grow the UK upstream decommissioning industry and establishing the UK as a global hub for the upstream decommissioning industry. The recommendations suggest a range of actions to be undertaken by a variety of organisations, which help to address:

• mapping the UK’s export capabilities in decommissioning
• developing country and region-specific support
• promoting UK capability
• exploring how financial support might help to increase opportunities for UK companies
• developing bilateral co-operation engagement to encourage international cooperation

Recommendation 1

Identification of overseas opportunities and develop international trade support aligned to UK supply chain decommissioning strengths and capabilities.

Recommendation lead

EIC.

Context

As global decommissioning activity grows, there will be a need to identify projects of scale where UK supply chain companies can compete, to gather relevant data and share details of market opportunities with the UK supply chain.

Proposals

• establish an accessible ‘opportunities database’, which could be effectively integrated into the existing North Sea Transition Authority (NSTA) Pathfinder tool.
• trade bodies to offer services that provide further, more specific detailed insight and analysis
• track and develop pipeline of important projects (short-, mid-, long-term)
• map technical information for near-term international decommissioning opportunities where possible
• OEUK/NSTA to continue to share lessons gleaned from operators and supply chain companies learnt from completed UK decommissioning projects

Recommendation 2

Development of country and region-specific support.

Recommendation lead

DNS.

Context

Maximise existing knowledge and services provided by DBT and in-country partners, alongside trade bodies, to support the supply chain in pursuing opportunities.

Proposals

• improve supply chain awareness of existing support services
• ensure target markets are identified and accessible
• investigate potential means to improve support and guidance provided, including opportunity specific support and competitor analysis

To see existing support services, please see Annex 1.

Recommendation 3

Promotion and advocacy of UK capability.

Recommendation lead

OEUK.

Context

The UK supply chain will benefit from appropriate marketing assistance and in-country support to showcase experience and expertise relevant to international markets where decommissioning opportunities exist.

Proposals

• work with DBT overseas teams to offer targeted and appropriate in-country support and market intelligence, and to undertake advocacy on behalf of UK supply chain companies
• production and use of export capability guides to promote UK expertise internationally and create upskill the supply chain domestically

Recommendation 4

The utilisation of existing UK financial products and development of decommissioning-specific financial solutions

Recommendation lead

UKEF.

Context

Supply chain companies could benefit from increased awareness of, and engagement with, available UKEF support.

Proposals

• work to improve awareness of adjust offerings to meet supply chain need and maximise on UKEF capability
• enable the UK supply chain to access an increased level of bonding and working capital through UKEF support
• utilise DBT and UKEF global teams and overseas capability to improve understanding of financing requirements of overseas decommissioning projects
• encourage the development of new technologies and processes by identifying where R&D is applicable and where overseas projects may be supported

Recommendation 5

Pilot bilateral cooperation project with an overseas government.

Recommendation lead

DBT.

Context

A targeted approach to markets of interest by utilising bilateral cooperation, which may serve to maximise UK supply chain involvement in overseas projects.

Proposal

• explore the potential for developing a framework for bilateral cooperation on international decommissioning projects
• develop estimates of opportunity size, appropriate providers, and additional support where required such as UKEF support

What next?

This document is the outcome of the Decommissioning Export Strategy Group’s considerations of UK supply chain strengths/capabilities and what support industry, regulators and government bodies need to develop to assist UK companies competing for and successfully securing contracts in international decommissioning projects. The recommendations outlined above will help to establish robust support mechanisms that will enable greater UK supply chain involvement in high value overseas decommissioning activity.

This strategy will act as the first phase in ensuring the UK decommissioning supply chain is equipped with the necessary tools to position itself as a world-leading hub for upstream decommissioning.

The recommendations in the strategy will be monitored by a steering group every quarter, to measure progress and ensure activities remain aligned with providing support to the UK supply chain, as set out in this document.

Acknowledgements

DIT would like to thank the following organisations that have contributed to the development of the Global Upstream Decommissioning Export Strategy and will continue to work on this strategy through implementation of the recommendations given above.

• Decom North Sea
• Energy Industries Council
• National Decommissioning Centre
• North Sea Transition Authority
• Global Underwater Hub
• Offshore Energies UK
• Net Zero Technology Centre
• Offshore Petroleum Regulator for Environment and Decommissioning
• Scottish Enterprise
• UKEF
• East of England Energy Group (EEEGR)
• Energy Transition Zone Ltd (ETZ Ltd)

Annex 1: further advice and support

The following government and private sector organisations help companies do business, through direct support to win business, technology development, working to build capability and through developing the regulatory framework within which companies operate. Please consult the websites for more information.

Scottish Development International

Scottish Development International (SDI) is Scotland’s international trade and investment agency. It aims to encourage and support more overseas businesses to set up in Scotland, invest in Scottish businesses or buy high quality Scottish products and services. It also helps Scottish-based companies to trade overseas and promotes Scotland as a good place to live, work and do business.

SDI has a network of 34 overseas offices in 23 countries across the globe. Its offices are a main entry point and interface into local companies and economies within a country or region. SDI also collaborates with its partner organisation, the Department for Business and Trade, in regions where SDI does not currently have an office to ensure that in-country support is available in those areas.

For companies that engage in the energy and low carbon sector, SDI undertakes a series of targeted missions and exhibitions that are designed to match company capabilities within country opportunities. If detailed information is required on the business environment in a particular region, then SDI can rely on the support of a network of Global Scots who are a community of international-based ambassadors, and access the 1-2-1 support, in market knowledge and real-life advice that can help Scottish companies establish overseas.

Department for Business and Trade

Overseas buyers

If you are looking to buy goods and services for your business and to find out more about how the UK is supporting the development of a greener and more sustainable future visit how we help you buy from the UK on great.gov.uk.

UK Export Finance (UKEF)

UKEF’s mission is to advance prosperity by ensuring no viable UK export fails for lack of finance or insurance, doing that sustainably and at no net cost to the taxpayer.

UKEF services include:

• offering long-term financing solutions to overseas buyers which helps make UK companies’ offerings more competitive, allowing buyers to spread costs whilst exporters receive payment on delivery
• helping exporters access working capital needed to fulfil export contracts, giving them the ability to take on more contracts and increase turnover
• helping exporters and investors manage risks in challenging markets with insurance products, where the private market is not able to offer insurance

North Sea Transition Authority

The role of the North Sea Transition Authority is to regulate and influence the UK oil, gas and carbon storage industries. The NSTA aims to be a value creator; ensuring economic recovery from the UK’s hydrocarbon resources and helping meet the UK’s energy demands, while supporting the UK’s energy transition and move to net zero carbon by 2050. It works in conjunction with other regulatory authorities and has a range of powers to deliver this remit.

Offshore Petroleum Regulator for Environment and Decommissioning (OPRED)

OPRED is responsible for regulating environmental and decommissioning activity for upstream operations in the UK. This includes:

• handling domestic and international policy relating to the environmental regulatory framework for upstream (working with other departments, environmental bodies and international organisations)
• developing, administering and enforcing the upstream environmental regulatory regime (including offshore gas unloading and storage and carbon dioxide storage)
• implementing the oil and gas decommissioning regime and ensuring that the costs are met by the oil companies and not the taxpayer
• managing the department’s Strategic Environmental Assessment for offshore energy projects
• working with other regulators to drive the reduction of greenhouse gas emissions from upstream operations; in line with the commitments of the government’s Net Zero Strategy and the Energy White Paper

Energy Industries Council (EIC)

The EIC delivers high-value market intelligence to members through an online energy project database, and via a global network of staff who work in-the-field to provide qualified regional insight.

Along with practical assistance and facilitation services, the EIC’s access to information keeps members one step ahead of the competition in a demanding global marketplace. The EIC is the leading trade association providing dedicated services to help members understand, identify and pursue business opportunities globally. Established in 1943, the EIC is a not-for-profit organisation with a membership of 700 companies that deliver goods and services to the energy industries worldwide.

EIC’s goal is to put members first and serve them well, providing one of the most comprehensive sources of energy projects and business intelligence in the energy sector today. The EIC is renowned for excellence in the provision of services that unlock opportunities for members, helping the supply chain to win business across the globe.

Offshore Energies UK

Offshore Energies UK (OEUK) is the leading representative body for the UK upstream industry. It is a not-for-profit organisation, established in April 2007 but with a pedigree stretching back over 40 years. OEUK are proud to inform, engage and champion the UK upstream industry as part of a diverse energy mix.

Membership is open to all companies active in the UK Continental Shelf, from super majors to large contractor businesses and SMEs working in the supply chain. OEUK aim to become the leading association within the UK energy industry, ensuring the UK North Sea remains an internationally attractive place to do business.

Decom North Sea

For over a decade, Decom North Sea has connected capability with opportunity across the decommissioning and late-life sector, internationally. Working across the energy sector (renewables, oil and gas and nuclear), the organisation works to share knowledge, facilitate collaboration, and maximise business potential for members.

Through events, communication and the development and delivery of innovative models and solutions, Decom North Sea strengthens the sector with its 220 strong membership that is drawn from operators, major contractors, service specialists and technology developers. With decommissioning spend alone being forecast at an estimated £15.1 billion over the next decade (oil and gas UK Decommissioning Insight Report 2020), Decom North Sea plays a vital role in solution development, cross-sector learning and helping to build supply-chain capability.

Global Underwater Hub

Underwater Hub (GUH) is an intelligence-led organisation which is uniquely placed to provide underwater companies with the commercially driven market intelligence, cross-sector network and support they need to capitalise on an unprecedented scope for growth. Built upon the almost 2-decade legacy of its predecessor, Subsea UK, and retaining its knowledge, networks and membership, the GUH is expanding its reach, scope and sphere of influence across all sectors operating in the underwater industry.

Supported with funding from both Scottish and UK governments, the ambition of the GUH is to grow the value of the country’s underwater industry from revenues of £8 billion today to £45 billion by 2035. This will establish it as one of the largest and fastest-growing industrial sectors in the UK, accelerating the transition to net zero and creating new high value jobs and exports. As a larger, well-resourced, strategically-focused organisation – still owned and led by industry – the GUH is working to support all underwater sectors including oil and gas, offshore renewables, ocean science, defence and aquaculture, offering a deeper level of service to a wider range of companies. With a base in north east Scotland, the GUH will also have a physical presence in other UK regions with the largest clusters of underwater activity – Northern England and Southern England - providing greater capacity to work right across the UK and foster the GUH’s valued work with members and other organisations to catalyse connections and cross-sector collaborations.

Net Zero Technology Centre

The Net Zero Technology Centre develops and deploys technology to accelerate an affordable net zero energy industry. Founded in 2017, the Centre was created as part of the Aberdeen City Region Deal, with £180 million of UK and Scottish government funding to maximise the potential of the North Sea. To date the Net Zero Technology Centre has co-invested £176 million in technologies screened over 1280 technologies, completed 64 field trials, with a further 49 planned or already live and have progressed more than 23 technologies to commercialisation.

East of England Energy Group

The East of England Energy Group (EEEGR) is a not-for-profit trade body representing the energy sector and its supply chain in the East of England.

Services include:

• introductions to other EEEGR members
• company profile listing on members directory, on the EEEGR website
• reduced ticket and exhibitor prices for EEEGR events and exhibitions, which are fantastic networking and information sharing opportunities
• opportunity to submit news stories for free to EEEGR news feed
• opportunity to advertise job vacancies for free through EEEGR jobs page
• work with one of EEEGR’s core programmes, Skills for Energy – Skills for Energy for students, young people interested in energy, employees, education and training providers or those looking for the next exciting step in their career
• skills related events and initiatives, supporting the next generation of energy industry employees
• opportunity to host bespoke events with EEEGR (at additional cost to membership/sponsorship)

Energy Transition Zone Ltd

The North-East of Scotland has a clear ambition to transform into a globally recognised and integrated energy cluster, focused on accelerating net-zero through energy transition activities. The unrivalled critical mass of skills, experience and infrastructure, drawing upon 50 years of operating a world class oil and gas sector, means Aberdeen is ideally placed within the UK to deliver a world-leading energy transition zone. ETZ Ltd is a private sector led, not for profit company created to drive forward the vision of transforming the North East of Scotland to become a global leader in energy transition activities and a net exporter of energy transition technologies and skills.

At the core of ETZ Ltd is the ambition to deliver the energy transition Zone, a purpose-built net zero green space, connected to the coastline and adjacent to the new £350 million deep-water harbour development at Aberdeen South Harbour. This 70-hectare space will be a leading-edge catalyst for innovation and high value manufacturing, a centre of excellence for offshore floating wind and other offshore renewables, for hydrogen and for carbon capture and storage.

Annex 2: potential target markets

IHS Markit forecasts global offshore decommissioning spending to reach almost USD100 billion for the 2021 to 2030 period, up by over 200% compared to the previous 10-year period.^{[footnote 6]} A breakdown of this spend can be seen below.

Market	%
UK	21
US	17
Brazil	9
Norway	8
Australia	6
Malaysia	6
Angola	5
Mexico	5
Indonesia	5
Other	21

Annex 3: supply chain sentiment

Summary of findings – supply chain sentiment 2020 (compared to 2018)

Activity findings from the dataset collated by the trade bodies are summarised as:

• turnover: 64% of respondents earned between 10 to 30% of gross revenue in decommissioning, with an average value of 11.35%. 36% earnt between 30 to 70%
• turnover on international decommissioning: highlighting a contrast with the above, 71% of respondents earned <10% of gross revenue conducting overseas decommissioning. In other words, a significant number are not realising export opportunities that are achieved in the domestic market
• foreign activity: 40% of responding companies worked overseas in 2020, down from 55% in 2018, although 92% expressed an interest in overseas activity

Drawing reference to the WBS, principle strengths for the UK supply chain were considered to be:

• project management
• well decommissioning
• subsea infrastructure
• facilities and pipeline

Given that well decommissioning represents the dominant component of the WBS and is a highly exportable activity, these strengths can be seen to underline the expectation that the UK has a valid claim to an export market for decommissioning services. Whilst many of the remaining elements in the WBS scored strongly as well, a small number of weaknesses are noted:

• topsides removal
• substructure removal
• onshore recycling

It is well known that the UK lacks flagged vessels capable of sizeable topside and substructure removals, with several European owned contractors being famed for this service and dominating the market. The UK has made good progress regarding yard and onshore recycling facilities, which is commendable, if not immediately applicable to export requirements.

When asked for possible assistance in developing export capability the following services were notably called for by respondents:

• technical workshops, (with access to operators and Tier 1 contractors)
• networking
• market intelligence and insight
• financial assistance/support

The above factors are considered to be of major importance by the Strategy Group and are directly addressed in the actions, recorded further below in this document. Given the relative strength and international renown of existing supply chain capabilities in decommissioning it is only logical that DBT, the trade bodies and other parties ensure that support is offered in order to maximise potential opportunities. Particular emphasis is given to the potential to enhance competitiveness through a combined support offered jointly by the UK’s international diplomatic presence and the trade bodies.

1. 1 North Sea Transition Authority. UK decommissioning cost estimate drops 25% to £44.5 billion 2022 ↩

2. EIC. Focussing on decommissioning 2021 ↩

3. IHS Markit. Are we entering a decade of offshore decommissioning? October 2021 ↩

4. OEUK. Decommissioning Insight 2021 ↩

5. IHS Markit. Are we entering a decade of offshore decommissioning? October 2021 ↩

6. IHS Markit. Are we entering a decade of offshore decommissioning? October 2021 ↩