Hearing two recent speeches on Europe and the oil and gas industry, one could be forgiven for thinking different topics were being discussed.
Upon publication of its annual forecast, the Offshore Manufacturers' & Constructors' Association (OMCA), Edinburgh, saw only dark clouds with an even darker lining in the form of the European Commission's procurement directive.
OMCA's most optimistic estimate is that utilization of U.K. capacity for offshore oil and gas projects will decline to about one fourth of today's figure by the beginning of 1993. This will improve during 1994-95--but slowly.
U.K. offshore manufacturing and construction capacity currently represents about 26 million man-hr/year out of total European capacity of 58 million. But expected demand is only 37.6 million man-hr in 1993 for North Sea and Mediterranean markets.
U.K. VIEWS
The U.K. industrial downturn is worse than previously anticipated, says OMCA, due to project slippage and increasing use of subsea technology. With EC's procurement directive, competition will be more heated because continental European yards should be able to compete for U.K. work on comparable terms. Norway has not fulfilled the hopes of OMCA members.
OMCA Chairman Syd Fudge said, "The U.K. offshore fabricating industry will do whatever is necessary to maintain its competitive position. However, it will need the full support of the U.K. government to gain a fair opportunity to win business outside the U.K. continental shelf."
On the other hand, government, in the form of Michael Heseltine, U.K. secretary of state for trade and industry, sees silver clouds with silver linings. Addressing a Financial Times conference, he portrayed Europe as a potential market for U.K. energy. Liberalization, which means trouble for OMCA, is not happening fast enough for Heseltine.
"Trying to convince our European partners of the urgency of accelerating progress on the liberalization of Europe's gas and electricity markets, as the natural counterpart to the energy liberalization that has occurred in this country, will be one of the main priorities of our presidency."
GIVE AND TAKE
Heseltine, like the rest of the British government, views Europe as a resource to be exploited for the benefit of Britain. He is prepared to lose in certain sectors if he gains on the overall deal. In short, he thinks like an EC member.
"Nearly two thirds of the U.K.'s export trade is in western Europe, compared with less than 40% when we joined the EC," he said.
Oil and gas is just one part of his Department of Trade and Industry concerns. And offshore fabricators are one part of the oil and gas sector.
Heseltine and U.K. Energy Minister Tim Eggar will focus on three main targets during the U.K. presidency of EC: removal of statutory monopolies in gas and electricity, access by new suppliers to existing infrastructure, and open relationships among production, transportation, and supply.
They will have little time for anything else.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
