‘Pragmatic’ offshore energy investment policy key to ensure UK’s supply chain stays put

With research showing that nine out of ten companies perceive business playgrounds in other countries as better suited for investment and growth, Britain’s trade body for the offshore energy industry, Offshore Energies UK (OEUK), has warned the UK government about the looming uncertainty surrounding the future of the nation’s offshore energy supply chain, spanning oil, gas, renewables, hydrogen, and carbon capture and storage (CCS), as it is at risk of moving overseas to bolster its economic standing and unlock further growth.

Key takeaways:

• UK’s energy supply chain at risk
• OEUK urges Britain’s government to prevent supply chain from moving abroad
• Domestic supply chain essential for energy security and sustainability

After its sentiment survey showed that 90% of the UK’s offshore energy supply chain companies see more attractive opportunities to grow their businesses overseas because of uncertainty and “a less positive business environment at home,” Offshore Energies UK’s ‘2025 Supply Chain’ report emphasizes that building on Britain’s “unique industrial strengths” in energy production is crucial to unleashing the government’s ambition to grow the nation’s economy and build the future of the North Sea.

Katy Heidenreich, OEUK’s Supply Chain and People Director, underlined: “The UK is competing internationally for energy investment so it’s concerning that many offshore energy supply chain firms see more attractive opportunities to grow their business overseas. We’ve set out key steps industry and government can take to position the UK as first choice for the offshore energy supply chain companies.   

“To grow the whole UK’s economy, we need energy policy that supports continued investment in homegrown oil and gas alongside an acceleration of renewable energy. This must be addressed, and we are working with our members to bring positive solutions to the table. It’s good to export our expertise but that should never come at a cost to work we need to get done in the UK.”

While the lion’s share of the supply chain now eyes overseas markets, OEUK is adamant that the offshore energy industry’s supply chain has the potential to power the UK’s drive to produce “secure, sustainable, and ever cleaner energy,” thanks to over 50 years of North Sea oil and gas operations. However, a pipeline of projects enabled by “pragmatic policy” is required in Offshore Energies UK’s view to anchor these companies in the United Kingdom.

In light of this, the report lists the barriers the industry faces, such as low revenues from renewables and declining investor confidence, while setting out the actions both industry and government can take to unlock a homegrown energy future. This encapsulates the main steps industry and government can take to prevent offshore energy companies from going elsewhere.

The moves to be made encompass industry initiatives aimed at fostering better collaboration across the supply chain alongside steps to ensure the government’s support for the UK energy supply chain capability in offshore wind, hydrogen, and CCS. 

The UK’s offshore energy supply chain, which forms what OEUK deems to be “an extensive and vital network” across the country from Shetland to Southampton and from Morecambe Bay to the Eastern Seaboard of England, comprises hundreds of businesses supporting the industry throughout its lifecycle, from installing wind turbines and producing oil and gas to decommissioning offshore installations. 

Heidenreich continued: “Around 60% of companies surveyed for the report are diversifying into offshore wind, hydrogen and carbon capture and storage but business revenues from renewables and CCS still represent a relatively low proportion as they make up between zero and a fifth of their turnover.  OEUK is currently engaging with critical government consultations on the future of our North Sea from industrial strategy to oil and gas licensing, environmental impact and a new fiscal regime.

“It’s vital we get this right to create a positive business environment in the UK for our supply chain. The offshore energies industry supports the sectors Britain needs to build its future. Steel, cement, ship building, glass, car making and many more rely on the energy and technologies we produce, including carbon capture which can offset and futureproof their energy-intensive operations.”

The British supply chain is said to represent an integrated ecosystem, which delivers products and services to energy producers, encapsulating FTSE 100 companies along with small to medium enterprises developing new technologies and providing specialist capabilities, including players involved in designing mooring systems, manufacturing specialist valves, installing high-voltage subsea cables, maintaining pipelines transporting energy and carbon, and removing offshore structures from the seabed, with many developing so-called global leadership in floating offshore wind and decommissioning. 

Furthermore, the report spotlights current challenges, such as harnessing oil and gas revenues from the UK’s still significant reserves to allow the supply chain companies to survive and thrive while outlining how efforts to create an attractive commercial environment are being supported through initiatives, including alliance contracting, shared inventory systems, and a drive to promote good procurement practice.

Such moves are interpreted to help operators, developers, major contractors, and suppliers of all sizes work better together, according to OEUK, which underscores that the report comes as decisions made in the coming months will not only shape the North Sea’s future but also its ability to unlock investment in low-carbon technologies while continuing to deliver the energy security the UK needs.

Heidenreich concluded: “With between 60-80% of the capabilities required to lead the energy transition to net zero emissions, our companies and highly skilled people are committed partners in delivering secure, and affordable homegrown energy.

“The UK government is rightly ambitious to develop the clean power capabilities to support its industrial strategy, but this goal must be delivered in a way that builds our supply chain capability. The prize is a homegrown energy future, not one that is imported.”  

Moreover, Offshore Energies UK’s report points out the need for a collective recognition that “a sustainable future is one that enables the supply chain to remain anchored in the UK while adapting and growing as new energy opportunities arise.”