'Enormous opportunities' as global drilling work surges

NORTH Sea companies are ideally placed to a seize the lion’s share of a multibillionpound expansion in the global offshore drilling industry, according to a new report published yesterday.

The Scottish Enterprise study reveals that more than £150 billion in investment is being planned in exploration and production drilling by oil companies across the globe – a 50 per cent increase in the global spend between 2002 and 2006.

The UK market is set to decline after peaking in 2006 at about $5.3 billion (£2.6bn).

But it is expected that the sustained high oil price, coupled with prospects off the Shetland Islands and Ireland, should maintain expenditure at about $4.2bn a year.

Brian Nixon, director of the energy team at Scottish Enterprise, said the planned expansion of the drilling sector would create "enormous opportunities" for Scottish companies.

Welcoming the findings of the independent research, Nixon said: "There is excellent work being done in the sector and our companies are very well regarded internationally for their highly skilled staff and innovative techniques, products and services.

"We hope the research will help companies see where their best opportunities lie and get a sense of which markets they should be targeting."

However, Nixon stressed: "They need to take their expertise to markets around the world if they want to expand. This can be a daunting prospect, so as well as making use of the research, I would urge companies to contact our Business Gateway International service, which can help them through every stage of the internationalisation process and make a real impact on accelerating growth."

The report states that, in addition to increased drilling activity over the next five years, there will also be a move to deeper water and more challenging environments.

It forecasts increased offshore activity in the deep waters of west Africa and Latin America and the harsh conditions of the Arctic Circle. And it is expected that deepwater spending will grow from 21 per cent of the 2006 global drilling market to 29 per cent by 2011. Africa will account for roughly a third of deepwater expenditure over the next five years.

However, major growth is also expected in the shallow waters of the Middle East, where the drilling market is forecast to expand from $3bn in 2006 to more than $4bn by 2011.

• The oil and gas team at Bank of Scotland Corporate has completed a brace of deals worth 43 million (£33.9m) to fund the development of fields in Italy.

Forecasts suggesting that Italy will account for 12.7 per cent of developedEurope oil demand by 2010, while contributing 3.3 per cent to supply.