The Aberdeen City and Shire
Export Survey 2010
Looking for support? Any enquiries? Please contact
Suzanne Harwood
International Trade Executive
Enterprise, Planning & Infrastructure
Aberdeen City Council
Tel +44 (0)1224 523510
Mobile +44 (0) 7795 047700
Email [email protected]
The Energy Sector
Cover image courtesy of Wood Group
THE ENERGY SECTOR
The Aberdeen City and Shire EXPORT SURVEY 2010
CONTENTS
FOREWORD
5
COMMENT FROM TOM FAICHNIE,
PARTNER AT CAMPBELL DALLAS
6-7
KEY FINDINGS
8
BACKGROUND AND OBJECTIVES FOR THE SURVEY
9
CURRENT EXPORTERS
●
●
●
●
●
●
●
●
●
Profile of Exporting Companies
Value of Exports
Key Trends
Future Plans and Expectations
Export Destinations
Key International Markets
How Business is Conducted in
International Markets
Barriers to Exporting
Support Needs of Exporters
NON-EXPORTERS
●
●
●
●
Profile of Non-exporting Respondents
Reasons for Non-exporting
Future Plans
Support Needs of Non-Exporters
9
9-11
12
13
13
15-16
17-18
19
19
19
21
21
22
22
22
WHAT DO THE SURVEY FINDINGS TELL US?
24
APPENDIX: HOW THE DATA WAS GATHERED
25
THE STRATMOS PROJECT
25
Aberdeen Harbour
2
3
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
FOREWORD
Thanks are due to the very many firms within the
Aberdeen City and Shire energy sector that once again
contributed to this biennial survey of export performance
in our region.
The continued importance of the sector to a prosperous
Aberdeen City and Shire is very clear from the findings
of this survey and, in particular, it is clear that
international trade becomes ever more important to the
sector. The report shows an increase in firms’ export
business and confidence that exports will be a
significant driver of growth for the future.
Gordon McIntosh
Director of Enterprise,
Planning & Infrastructure,
Aberdeen City Council
All of us, private sector, public sector and industry
bodies, have a role to play in working together to ensure
that this potential can be realised and we hope that this
report (along with its companion document that covers
sectors other than energy) will help to inform the debate
as to how this can best be done.
Aberdeen City Council and Aberdeenshire Council would
like to take this opportunity to thank Aberdeen and
Grampian Chamber of Commerce for contributing to the
process of this survey and encouraging their members to
participate.
In addition, we would like to express our thanks to
StratMoS the Interreg North Sea Region project
“Motorways of the Sea” for their support and to ibp
Strategy and Research who were commissioned by
Aberdeen City Council and Aberdeenshire Council to
produce this Export Survey 2010.
Belinda Miller
Head of Economic
Development,
Aberdeenshire Council
Aberdeen Exhibition & Conference Centre (AECC)
4
5
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
COMMENT FROM TOM FAICHNIE,
PARTNER AT CAMPBELL DALLAS
The energy industry is vital to the prosperity of the
Granite City and surrounding Aberdeenshire. An
estimated 135,600 jobs exist in the region through
direct and indirect employment from the oil and gas
industry, whilst gross domestic product per capita for the
city is £29,764 compared to £17,400 for the UK as a
whole. With Oil & Gas UK estimating 15-24 billion boe
(barrels of oil equivalent) remains recoverable in the
North Sea, the leading technology, skills and
capabilities for which Aberdeen City and Shire
companies have developed a world class reputation, will
continue to be in demand in the North Sea and beyond.
Internationalisation is vital to secure the future of the
energy sector in Aberdeen City and Shire. According to
the results of global executive headhunter Maxwell
Drummond’s 2011 Annual Energy Survey, demand for oil
and gas from emerging economies is expected to
dominate the industry over the next five years. This
survey also unfortunately reflected a deterioration in
the perception of the North Sea as a good place to do
business following the Chancellor’s recent unexpected
tax increase on North Sea production. Whilst the
effects are still to be fully seen, this could highlight a
risk to businesses that are over-reliant on a single
market.
The skills developed for the North Sea industry presents
lucrative exporting opportunities. This is supported by
around 75% of energy industry survey respondents
taking advantage of these with an additional 4% of
non-exporting companies making a serious effort to
develop their international business. Of the others, it’s
likely that they are still indirectly involved: selling to UK
businesses often means that products will be used
outside the North Sea. In many cases, these sellers can
be just as reliant on international markets as ‘real’
exporters. It truly is a global industry.
This survey shows many pro-exporting Aberdeen City
and Shire respondents were enthusiastic about
increasing their activity. Companies also demonstrate a
change of focus from the more traditional export routes
of the US, Norway and West Africa towards exploiting
the huge potential in markets such as Brazil and
Australia. This is supported by the Maxwell Drummond
research which confirmed the majority of respondents
believed that, within ten years, global exploration and
production will be focused in Latin America and
Australasia.
The entrepreneurial and adventurous spirit of the energy
industry in the area is equally shown by the rapid
increase in prominence of countries such as Iraq,
Equatorial Guinea and Vietnam as future target markets
which are high on the radar when compared to the 2008
survey.
The skills developed in the North Sea have provided our
companies with market leading credentials and a
knowledge base which will increasingly be in global
demand. The industry excels in finding solutions to
complex problems, developing existing technology, an
ability to quickly design and innovate along with adhering
to high quality technical, health and safety and
environmental standards. As the era of “easy oil” is over,
and significant new discoveries are likely to be in deeper
water and “unconventional sources” where technology
must continually advance to develop the reserves in a
cost effective manner. The Aberdeen City and Shire
expertise places local businesses in a strong position to
capitalise on this trend.
That said, the step into new markets is not without
many challenges. Finding the right partner to facilitate
internationalisation is a critical step. It’s all about who
you know - and the locals have the power. You need to
stand out. Showcase your skills and industry
experience, understand the differing business culture
you find yourselves in and establish personal
relationships. Be there, make an effort. It’s essential to
build a friendship. Visits may be time consuming, but
costs will undoubtedly be outweighed by business
benefits. Adhere to corporate etiquette, too.
The global opportunities are growing and Aberdeen City
and Shire companies are exceptionally well placed to
take advantage of these. But the survey shows that
these opportunities are likely to be further afield, where
cultures are different and there are less developed
supply chains. We cannot rely on reputation alone –
we must demonstrate our technologies, skills and
credentials to these countries to ensure we stay ahead
of our global competition. We must also learn how to
do business in these countries – it is often different but
once understood is not necessarily difficult. Long term
planning and identification of new opportunities is vital
to ensure Aberdeen City and Shire companies remain at
the cutting edge of the global industry.
Tom Faichnie
Partner at Campbell Dallas
Campbell Dallas is an award winning independent chartered accountancy firm and is the Aberdeen member of UHY, an
international association of independent accounting and consulting firms.
6
7
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
KEY FINDINGS
55% of Energy sector exporters have
increased their export sales over the
past two years.
31% have increased the value of
their international activity by up to
20%.
24% have increased the value of their
international activity by over 20%.
The top target markets for these
exporters are: Brazil, Australia,
Norway, Angola and Egypt.
80% plan to increase their export
sales over the next two years,
including 28% planning to
increase their export sales by over
20%.
The most in-demand forms of
assistance to these exporters are:
finance to attend specific
overseas trade exhibitions (52%);
participation in overseas trade
missions (48%); and finance for
marketing and promotion (46%).
30% have international business of
more than £5m per annum (compared
to 20% in 2008).
64% of Energy sector exporters are
headquartered in Aberdeen City and
Shire.
14% have international business
with an annual value of £20m+
(compared to 8% in 2008).
54% have been exporting for over
10 years.
The top markets in which Energy
sector exporters are currently active
are: Norway, USA. Australia, UAE and
Angola.
8
Current Energy sector exporters
list their most important markets
(in terms of turnover) as: Norway,
USA, Angola, Australia and Brazil.
BACKGROUND AND
OBJECTIVES FOR THE SURVEY
CURRENT EXPORTERS
Background
Profile of Exporting Companies
The Aberdeen City and Shire Export Survey is carried out
every two years and is one of the most comprehensive
surveys of its kind in Scotland. This year’s survey has
been more far reaching that ever, with a total of 795
companies providing their feedback, either through
online questionnaires, hard copy questionnaires or
telephone interviews.
A detailed profile of the 178 exporting companies that
provided feedback is set out in Figure 1.
Figure 1: MOST IMPORTANT SUB-SECTOR OF ENERGY SECTOR
EXPORTERS
1% 1% 4%
Oil & Gas has historically been considered as a key
driver of the Aberdeen City and Shire economy and
international trade in particular. This is reflected in the
survey returns, with 236 businesses describing energy as
their main business sector.
This report sets out the feedback provided by these
energy sector firms; it is based on responses from
236 firms in the sector (178 of these were current
exporters (75%) and 58 non-exporters (25%)).
94%
Energy - sub sector
not specified
Energy - Oil and gas
Energy - Power
Energy - Renewables
Objectives
This year’s survey developed further the questionnaire
used in previous years and covered the following issues:
● Propensity to export and the exporting experience
of firms
● Value of exports
● Key trends
● Future plans and expectations
● Export destinations
● Methods of servicing international markets
● Barriers to exporting
● Support requirements.
Feedback was sought both from exporters and from nonexporters, where relevant.
The overall purpose of the survey is to provide
information to help shape the services offered by the
various public agencies, thus ensuring the international
trade needs of the Aberdeen City and Shire business
community are met in the future.
It is very clear that oil and gas remains the most
important part of the Aberdeen City and Shire Energy
sector.
This is not to say that oil and gas is the ONLY Energy
sub-sector in which these firms operate.
18% of exporting firms in the oil and gas sector say they
are also involved in the power sub-sector and 3% in the
renewables sub-sector.
Likewise, companies involved in the Energy sector also
participate in other sectors. For example, 34% state that
they are also involved in the Engineering sector more
generally. From the other side, 30% of the exporting
firms that indicated Engineering as their MAIN sector
said they were also involved in the Energy sector.
9
The Aberdeen City and Shire EXPORT SURVEY 2010
Figure 2 shows that the majority of exporting firms
within the energy sector in Aberdeen City and Shire
were limited companies:
THE ENERGY SECTOR
When did your business begin doing business in international markets? (by location of Head Office base)
60%
60%
50%
Figure 2: BUSINESS STATUS
Figure 5: DURATION OF INTERNATIONAL TRADING
Figure 3: LOCATION OF HEAD OFFICE BASE
49%
Overall
Aberdeen City
Aberdeenshire
49%
50%
4% 1%
8%
57%
54%
Somewhere else
40%
42%
40%
30%
23%
32%
27%
29%
30%
21%
20%
10%
7%
0
Aberdeen City
Limited company
Branch operation of
larger business
PLC
Partnership
Although some of the exporting firms are headquartered
outside the area, the majority have their Head Office
base in either Aberdeen City or Aberdeenshire (and
particularly Aberdeen City) as shown in Figure 3.
14%
13%
10%
87%
24%
24%
20%
Aberdeenshire
Outwith Region
As shown in Figure 4, it is usually the case that
international activity is managed from an Aberdeen City
and Shire base.
Figure 4: INTERNATIONAL ACTIVITY BASE
Is your company’s international activity managed from a
base in Aberdeen City and Shire?
100%
82%
80%
60%
40%
0
5%
15%
12%
2%
Within the past two years
Between two and
five years ago
Between five and
ten years ago
Over half (54%) of exporting companies began exporting
more than ten years ago and a further 24% began
exporting between five and ten years ago; only 7% of
exporters in the sector began doing business in
international markets within the past two years. The
figures show that firms headquartered outwith Aberdeen
City and Shire and those headquartered in Aberdeen City
are more likely to be mature exporters. There is a
significantly higher proportion of “new” exporters
amongst firms headquartered in Aberdeenshire (13% of
these having first begun doing business in international
markets over the past two years).
More than 10 years ago
Figure 6 profiles the size of exporting businesses as
compared to non-exporters:
Exporting firms in the energy sector are somewhat more
likely to be larger than their non-exporting counterparts.
The majority of exporting firms in the energy sector
either consider themselves to already be major
international players in their sector (43%) or to be
making a serious effort to develop international sales
(44%); 14% of exporting firms could be described as
“passive exporters”.
Figure 6: SIZE OF EXPORTERS AND NON-EXPORTERS
18%
20%
50%
Exporter
43%
0
Yes
No
Figure 5 shows how long the energy sector exporters in
the survey have been doing business in international
markets.
Non-exporter
40%
30%
33%
30%
26%
20%
27%
15%
10%
7%
10%
7%
2%
0
10 employees
10
10 to 25
employees
26 to 100
employees
101 to 250
employees
More than 250
employees
11
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
Table 1: CURRENT ATTITUDE TO INTERNATIONAL TRADING
Which of these statements best describes your business’s current attitude to international trade?
Attitude to international trade
Business takes international business when it comes to
us without putting too much effort into it
Business is making a serious effort to develop our
business in international markets
Business is already a major international player in our sector
Value of Exports
Overall
14%
Aberdeen City
13%
44%
Aberdeenshire
27%
49%
43%
54%
38%
20%
Figure 8: DEPENDENCY OF FIRMS ON INTERNATIONAL BUSINESS
Figure 7 profiles the declared value of international
business from Aberdeen City and Shire amongst energy
sector firms that responded to the survey. These figures
show some differences in the profile of the value of
international activity between the 2008 and 2010 surveys;
a higher proportion of exporting firms now claim the value
of their international business from Aberdeen City and
Shire to be greater than £5,000,000 (30% compared to
20% in 2008) and a higher proportion indicate that they
have international business with an annual value of
greater than £20m (14% compared to 8% in 2008).
Figure 8 profiles the dependency of exporting firms on
international business activity by looking at the
proportion of their turnover accounted for by
international business. These figures suggest that
exports play a very significant role in the business mix of
exporting companies within the energy sector.
Approximately a third of respondents claim that over half
of their business’s annual turnover comes from
international trade.
What percentage of your business’s annual turnover
comes from international trade? (Aberdeen City
and Shire base only)
7%
33%
14%
22%
24%
Putting these figures in context, the SCDI’s Survey of
International Activity in the Oil and Gas Sector 2008 / 09
suggests a value of £6.56bn for total oil and gas
international sales from Scotland. As the figure of
£2.9bn quoted above includes only respondents to this
survey and is not extrapolated to the population of
energy sector firms as a whole, then it is clear that
Aberdeen City and Shire firms represent a large
proportion of these international sales.
% OF TURNOVER FROM INTERNATIONAL TRADE
0 to 5%
6 to 15%
31 to 50%
51 to 100%
16 to 30%
Figure 7: VALUE OF INTERNATIONAL BUSINESS
What is the approximate value of your current international business per annum? (Aberdeen City and Shire base only)
40%
2008
30%
25% 24%
19%
12%
10%
0
12
12%
10%
6%
Up to
£250,000
Between
£250,000
and £500,000
Between
£500,000
and £1m
15%
13%
9%
Between
£1m and
£2m
Key trends
The 2010 survey asked respondents how the value of
their international activity had changed over the previous
two years. The results of this for the energy sector are
very positive.
2010
20%
Significant care needs to be taken in assessing the
overall value of international business from the
Aberdeen City and Shire area, partly because not all
exporters respond to the survey. Comparisons to
previous data also need to be read with caution due to
the different composition of the sample of responses
(the figure quoted in the 2008 survey for export sales
from Aberdeen City and Shire for energy and non-energy
sectors together was £1.34bn). Having said this, analysis
of the data from the 2010 survey shows that the value of
export sales from Aberdeen City and Shire, claimed by
energy sector companies that responded to the survey,
was approximately £2.9bn. Much of this comes from 21
firms that gave data to indicate their level of
international business when the figure quoted was
above £20,000,000. The total value of international
business claimed by these firms alone from Aberdeen
City and Shire is £2.3bn and it may well be that some of
these very large figures from some firms were not
included within previous surveys. Rather than
necessarily indicating a major increase in exports it
seems likely that export turnover amongst Aberdeen City
and Shire businesses is simply higher than previously
thought.
8%
Between
£2m and
£5m
Over the past 2 years, how has the value of your
business’s international activity changed?
40%
35%
31%
30%
24%
20%
10%
4%
6%
Reduced
by more
than 20%
Reduced
by up to
20%
0
Stayed
the same
Increased
by up to
20%
Increased
by more
than 20%
55% of exporting firms in the sector said that their
export sales had increased over the past two years and
this includes 24% of firms where exports have increased
by more than 20%. These figures compare to only 10%
of exporting companies in the energy sector that say
export sales have reduced in the past two years.
Firms headquartered in Aberdeen City were slightly more
likely than those from Aberdeenshire to have seen an
increase in the value of their international activity over
the previous two years (57% compared to 49%).
Future plans and expectations
As shown in Figure 10, many current exporters in the
energy sector have aspirations to grow their export
business over the next two years, sometimes
significantly. 80% say they plan to increase export sales
over the next two years and this includes 28% who plan
to increase export sales by more than 20%. These
figures compare to only 3% of current exporters in the
energy sector that anticipate a reduction in export sales.
14%
10%
Between
£5m and
£10m
Figure 9: CHANGE IN VALUE OF INTERNATIONAL ACTIVITY
6%
6%
Between
£10m and
£20m
8%
More than
£20m
13
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
Export destinations
Figure 10:
PROJECTED CHANGE IN VALUE OF INTERNATIONAL ACTIVITY
Over the next 2 years, how do you think that the value of
your business’s international activity will change?
Table 2 profiles the countries in which firms from the
energy sector have been active, comparing results to the
2008 survey and identifying the diverse set of markets in
which Aberdeen City and Shire firms operate.¹
60%
52%
50%
Table 2: COUNTRIES IN WHICH COMPANIES ARE CURRENTLY ACTIVE
Please place a tick in the box next to each country in the
space below if your business is currently active in these
markets.
40%
30%
28%
Reduced
by more
than 20%
Reduced
by up to
20%
0
Stayed
the same
Increased
by up to
20%
Increased
by more
than 20%
64%
USA
2
➜
46%
Australia
3
➜
2%
➜
41%
UAE
4
➜
37%
Angola
5
➜
1%
1
36%
Netherlands
5
36%
Nigeria
7
➜
10%
Norway
31%
Singapore
8
➜
17%
2010 %
➜
20%
2010 Rank Movement
29%
Brazil
9
➜ ➜
Country
28%
Azerbaijan
10
28%
Norway and the USA have retained their positions as
number 1 and 2 in the rank of export destinations
amongst Aberdeen City and Shire energy sector
Figure 11: COUNTRIES WHICH ARE MOST IMPORTANT
% of firms ranking as most important country
Which countries are currently your business’s most
important markets in terms of turnover?
14
exporters and the UAE has retained its place in 4th.
Australia has moved up two places from 5th to 3rd and
Angola has moved up a place from 6th to 5th equal.
Notable “new entries” are Brazil and Azerbaijan.
Netherlands has dropped from 3rd to 5th equal and
Singapore from 7th to 8th.
20%
Placing these results in context, the SCDI Survey of
International Activity in the Oil and Gas Sector 2008 / 09
identified that the biggest markets for direct exports from
Scotland were Angola, Norway, the United States, Nigeria
and the UAE, all of which are in the current top 7 markets
for Aberdeen City and Shire Energy Sector exporters.
As well as indicating what markets businesses are
currently involved in, the survey also asked respondents to
identify which markets were most important to their
business in terms of turnover. Figure 11 sets out the top
countries identified as the “most important” market (a total
of 39 countries were actually identified by at least one
energy sector exporter as their most important market).
¹ The figures quoted give a broad indication of the trends in
terms of markets in which firms are currently active. It should
be noted, however, that the question was asked in a slightly
different way in 2008 (where it was a “write-in” question)
compared to 2010 (where respondents were asked to choose
from a prompted list). The rankings from 2008 are derived from
the responses from all companies that said they were involved
in the oil and gas sector whereas in 2010 the figures, like
others in this report, are based on those firms that specified
energy (including oil and gas) as their main sector.
20%
18%
16%
14%
12%
12%
10%
8%
6%
4%
4%
4%
3%
3%
3%
3%
3%
3%
3%
3%
Brazil
France
Germany
Ghana
Libya
Qatar
UAE
2%
0
Norway
USA
Angola
Australia
15
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
The markets most commonly described as most
important for Aberdeen City and Shire exporters within
the energy sector are Norway (20% of exporting firms
say that this is their most important market) and the USA
(12%).
An overview of opportunities in some of the key markets identified in the previous section is set out below, based on
information provided by UK Trade and Investment.
FOCUS ON NORWAY
FOCUS ON THE USA
The survey findings also allow us to analyse the markets
that current exporters plan to target and also to compare
these results to the rankings for the 2008 survey.²
This year’s Aberdeen City and Shire Export Survey sees
Norway again topping the list as the most important
market for current exporters.
Brazil is now the market that energy sector exporters are
most likely to plan to target (previously it was 6th equal).
Other markets that feature prominently and which
energy exporters are increasingly likely to plan to target
include: Australia (previously 3rd), Kazakhstan
(previously 6th) and Norway, Angola, Egypt, Nigeria and
Azerbaijan (none of which were in the top 10 when this
question was put in 2008).
What is perhaps surprising with this year’s survey is that
Norway is ranked 3rd for future markets, behind Brazil
and Australia (having not previously been in the Top 10
in terms of new markets for current energy sector
exporters).
The most significant amount of oil and gas activity takes
place in the Gulf Coast region. Texas and Louisiana are
the largest producers of oil and natural gas in the United
States, largely offshore. Texas and Louisiana house the
major infrastructures necessary for the production,
refining and transportation of oil and natural gas. Texas
and Alaska each account for large shares of U.S. crude
oil production, but even they are surpassed by the
Federal offshore areas in the Gulf of Mexico and
California, which produce approximately 30 percent of
the U.S. total.
Table 2: COUNTRIES WHICH EXPORTERS PLAN TO TARGET
Please tick in the box next to any countries that your
business plans to target over the next two years or so.
➜ ➜ ➜ ➜ ➜ ➜ ➜
34%
21%
20%
19%
Azerbaijan
10
USA
10
➜
2010 %
➜
2010 Rank Movement
➜ ➜
Country
18%
Brazil
1
Australia
2
Norway
3
Angola
4
Egypt
4
Kazakhstan
4
UAE
4
Malaysia
8
Nigeria
9
27%
26%
21%
21%
21%
18%
² Again, the figures quoted give a broad indication of the
trends in terms of markets that firms plan to target. It should
be noted, however, that the question was again asked in a
slightly different way in 2008 (where it was a “write-in”
question) compared to 2010 (where respondents were asked
to choose from a prompted list). The rankings from 2008 are
derived from the responses from all companies that said they
were involved in the oil and gas sector whereas in 2010 the
figures, like others in this report, are based on those firms that
specified energy (including oil and gas) as their main sector.
16
Key International Markets
The Norwegian economy coped well with the recent
global financial crisis and during this period we noted a
significant increase in enquiries from companies in the
UK which continues,. Interest is not only from exporters
directly related the oil and gas and energy sectors, but is
across the board, including consumer goods, investment
opportunities, R&D, energy, infrastructure and business
and financial services.
There are a number of interesting new projects with
significant business opportunities for existing exporters,
but also for companies new to export. They include:
● New acreage being opened up for exploration on the
Norwegian Continental Shelf.
● Increased activity in the Barents Sea on the
Norwegian and Russian continental shelves with
exploration moving northwards into Arctic waters.
● Enhanced oil recovery.
● Future decommissioning projects.
● Upgrade to the national grid.
● Studies are underway for two possible electricity
interconnectors which could link the national grids
in Norway and UK .
Key sub-sectors that present opportunities for Aberdeen
City and Shire exporters include:
● Asset / Project Management
● Computer Software and Hardware
● Corrosion / Abrasion Controls
● Engineering Services
● Instrumentation and Controls
● Process Equipment and Services
● Training / Education
● Support services for Oil and Gas operations
Subsea Operations Wellbore Services
Information supplied by UKTI, USA
Companies in Aberdeen City and Shire are wellpositioned to take advantage of these and other
opportunities to grow their business in Norway.
Information supplied by UKTI, Norway
17
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
FOCUS ON BRAZIL
Specialists estimate that the pre-salt offshore area in
Brazil may contain more than 56 billion barrels of oil. The
new big discoveries in this region could make Brazil the
6th largest oil and gas producer in the world. The
Aberdeen City and Shire report findings underpin the
interest and opportunities in the Brazilian market. The
rapid growth of investment by Petrobras and the exciting
results of pre-salt development have firmly put Brazil on
the radar screens of many Aberdeen City and Shire
companies.
The UK Trade and Investment offices in Brazil have
experienced a dramatic increase in the number of
companies from Aberdeen visiting Brazil over the last
five years to identify business and partnerships
opportunities with Brazilians. Companies from diverse
disciplines such as manufacturing, seismic, chemicals,
drilling, freight as well as training and education and the
legal sector are amongst those who are now benefiting
from expanding operations to the market.
The UK companies present in the North Sea have an
outstanding reputation in Brazil for innovation and
manufacturing excellence in the market and are well
placed to benefit from the growing potential in the
Brazilian energy industry.
Information supplied by UKTI, Brazil
How business is conducted in
International markets
Figure 13: BARRIERS TO DOING BUSINESS IN
INTERNATIONAL MARKETS
Figure 12 profiles the channels used by exporting firms
to service international markets. Direct sales remain the
most common method of servicing export business, with
75% of exporting firms within the energy sector doing
business in this way. 25% of exporting firms use incountry representatives or distributors, 17% sell through
an in-country subsidiary office, 15% use an in-country
branch office and 13% sell direct to a UK-based buyer.
How does your business do business in these countries?
43%
40%
35%
33%
30%
30%
29%
28%
25%
15%
10%
79%
5%
70%
0%
Existing
competition
60%
50%
40%
30%
25%
20%
17%
15%
10%
13%
Security/
political
risk
Difficlties
getting
paid
Exchange
Price
rate
competitiveness
of goods and
services
“Difficulties getting paid” is the third most common
barrier reported by exporters in the energy sector and a
significant proportion of these exporters identified other
financial issues as being barriers with examples
including exchange rate (cited by 28% of exporters in the
energy sector as a barrier), cost of market entry (cited by
25%) and lack of working capital (17%).
0
Direct sales to
that country
from a UK
base
In country
representative
or distributor
In country
subsidiary
office
In-country
branch office
Direct sales
to UK based
buyer
Barriers to exporting
Figure 13 summarises the most common barriers that
exporters within the energy sector perceive in relation to
developing their international business (the base for this
question is taken to be only those exporting companies
that cited any barriers). The most common barriers to
existing businesses developing their international
business include existing competition (cited by 43% of
exporting companies in the energy sector) and security
and/or political risk (cited by 33%).
18
45%
20%
Figure 12: HOW BUSINESS IS CONDUCTED IN
INTERNATIONAL MARKETS
80%
Please place a tick next to those issues that you
consider to be barriers for your business.
Support needs of exporters
Approximately 50% of current exporters in the 2010
survey indicated an interest in at least one element of
international assistance from the prompted list that was
provided to them.
The most common areas of support sought by these
existing exporters in the energy sector include finance to
attend specific overseas trade exhibitions (mentioned by
52% of those exporters that indicated an interest in any
form of support), participation in overseas trade missions
(mentioned by 48%) and finance for marketing and
promotion (46%).
19
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
Figure 14: FUTURE FORMS OF INTERNATIONAL ASSISTANCE
Please indicate which forms of international assistance
would be of interest to your business.
NON-EXPORTERS
Profile of non-exporting respondents
60%
52%
48%
50%
46%
41%
40%
37%
30%
The profile of the non-exporters within the energy sector
is broadly similar to that of exporters with a high
preponderance of oil and gas businesses, although a
significantly higher proportion of these non-exporters did
not specify a particular sub-sector of energy as their
most important business sector.
Figure 15: MOST IMPORTANT SECTOR OF NON-EXPORTERS
20%
3%
3%
14%
The majority of non-exporters were also headquartered
locally (particularly in Aberdeen City), although a
reasonably high proportion of them were businesses
headquartered outwith the Aberdeen City and Shire area.
Figure 17: LOCATION OF HEAD OFFICE BASE (NON-EXPORTERS)
40%
40%
36%
35%
30%
24%
25%
20%
10%
15%
0
Finance to
attend
specific
overseas
trade
exhibitions
Participating
in overseas
trade
missions
Finance
for
marketing
and
promotion
Participating
in overseas
trade
exhibitions
as part of a
group
10%
Published
market
information
5%
0%
79%
Aberdeen City
Energy - sub sector
not specified
Energy - Oil and gas
Energy - Power
Energy - Renewables
Non-exporters within the sector were very likely to be
Limited Companies as shown in Figure 16:
Figure 16: BUSINESS STATUS OF NON-EXPORTERS
5%
Aberdeenshire
Outwith Region
Only a small minority of non-exporters have an intention
to develop their business internationally over the next
few years, as shown in Table 4. Only 4% of nonexporters in the energy sector suggest that they are
making a serious effort to develop in international
markets and a further 13% adopt the stance of a passive
exporter. The remaining 83% of those that expressed a
view said that they had no plans to develop their
business internationally over the next three years.
4%
Table 4: CURRENT ATTITUDE TO INTERNATIONAL TRADING
Which of these statements best describes your
business’s current attitude to international trade?
11%
Business’s current attitude to trade
%
Business does not plan to trade internationally
within the next three years
83%
81%
Business takes international business when it comes
to us without putting too much effort into it
13%
20
Limited company
Branch operation of
larger business
PLC
Partnership
Business is making a serious effort to develop
our business in international markets
4%
21
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
Reasons for Non-Exporting
barriers mentioned by non-exporting firms in the sector
included existing competition (cited by 18%), ability to
service clients in the overseas market, lack of
management resources / time, language issues and
legal issues (all mentioned by 15%).
As shown in Figure 18 the most common reasons why
non-exporters do not trade internationally at present
were that they had simply never considered trading
internationally or already have enough business in the
home market (cited by 30% in each case).
Figure 19: BARRIERS TO DOING BUSINESS IN INTERNATIONAL MARKETS
Please place a tick next to those issues that you consider to be barriers for your business.
20%
18%
18%
15%
16%
15%
15%
15%
14%
Figure 18: REASONS FOR NOT TRADING INTERNATIONALLY AT PRESENT
If you do not trade internationally at present, what would you say are the reasons for this?
9%
9%
9%
Cost market
entry
Difficulties in
getting paid
Exchange
rate
8%
34%
35%
30%
6%
4%
30%
3%
2%
25%
0
20%
15%
8%
10%
6%
6%
6%
0%
Already have enough
businesss in the
home market
Have never
considered trading
internationally
Would be too
expensive to build
business in these
markets
Costs of trading
internationally are
too high
Some differences between Aberdeen City and
Aberdeenshire businesses were evident in this regard.
For example, 50% of non-exporters headquartered in
Aberdeen City suggested that already having enough
business in the home market was a reason for not
trading internationally compared to only 15% of nonexporters from Aberdeenshire. On the other hand, nonexporters from Aberdeenshire were more likely to say
that they had never considered trading internationally
(38% compared to 22% of non-exporters headquartered
in Aberdeen City).
When asked about specific barriers, a wide spread of
responses from current non-exporters in the energy
sector were evident, as shown in Figure 19 (the base for
this question is all non-exporting respondents to the
survey).
Clearly, many non-exporters have never considered
exporting and therefore many could not comment on the
specific barriers that they faced. The most common
Don’t think our
products and
services could be
exported
Not sure how to go
about trading in
international
markets
Existing
competition
Ability to
service
clients in the
overseas
market
Lack of
management
resources/
time
Language
issues
Legal issues
Corrupt
practices in
overseas
countries
Price
competitiven
ess og
goods and
services
Future plans
5%
22
12%
10%
40%
30%
12%
12%
Other
Only 6 of the 58 non-exporting firms in the survey
identified any geographical markets that they would
target in the future. The most common markets cited
were the USA (6 respondents), Canada (4 respondents),
France (4 respondents), Norway (3 respondents) and
Australia (3 respondents).
Support needs of non-exporters
Very few non-exporters indicated the sorts of
international assistance that would be of value to them
(only 10 of the 58 non-exporting firms did so) suggesting
that most non-exporting firms had given little thought to
the challenges and opportunities of exporting as a
business development option. The most common areas
of support looked for by this relatively small number of
firms included: assistance to establish a market
presence, export documentation assistance, finance to
attend specific overseas trade exhibitions and help to
prepare for doing international business.
If you require any support or have any enquiries
regarding the above please contact
Suzanne Harwood
Aberdeen City Council International Trade Executive
on +44 (0)1224 523510 or e-mail
[email protected]
23
The Aberdeen City and Shire EXPORT SURVEY 2010
THE ENERGY SECTOR
WHAT DO THE SURVEY
FINDINGS TELL US?
APPENDIX:
HOW THE DATA WAS GATHERED The StratMoS Project
The Aberdeen City and Shire Export Survey illustrates
clearly the international orientation that already exists
within the Aberdeen City and Shire energy sector and
suggests that the extent of international business may be
even greater than was previously thought.
The Aberdeen City and Shire Export Survey 2010 was
developed further from the 2008 version in order to
provide a fuller understanding of the issues under
investigation. In some instances, comparisons to
previous reports (particularly the most recent report in
2008) have still been possible. Data on potential
respondents was gathered from a variety of sources and
e-mail and postal invitations were issued as follows:
International sales have grown in importance over the past
few years and represent an increasing proportion of many
firms’ business. Norway and the USA remain the most
common markets for exporters but markets such as
Australia and Angola are growing in importance and, in
particular, Brazil is now the most common new market for
businesses in the sector to target.
●
681 postal invitations, followed by a reminder,
leading to 62 responses.
●
1,966 e-mail invitations (to complete an online
survey form) as well as email distribution through
Aberdeen and Grampian Chamber of Commerce,
followed by a number of reminders, leading to 205
online responses.
●
552 follow-up telephone interviews.
Existing exporters within the energy sector are clearly very
optimistic about the opportunity to grow their international
business over the next few years.
Clearly, there is potential for additional economic benefits
to be achieved over the next few years from international
business in the energy sector and those involved in
supporting international trade need to consider how to best
focus the available resources in the future. The survey
findings suggest that, for existing exporters, the key
challenges are about making the necessary business links
within their existing and target markets and support should
be targeted accordingly taking account of the changes in
current markets and future target markets described herein.
There remains a significant proportion of firms in the sector
that do not export. In relation to this group, the challenge is
twofold. A small number of current non-exporters already
see the potential of international business and the focus of
support for these businesses should be on assisting their
preparedness for international business. However, the
survey suggests that many non-exporters have hitherto
given little attention to exporting as an element of their
business mix, even when their goods and services are
exportable. There is a different challenge therefore in
encouraging such businesses to at least consider the
potential for them to develop their business through
international trade.
24
A small number of responses were invalid because they
did not provide the necessary data on sector and / or
whether the firm was an exporter, which was required
for the analysis. A certain number of duplicate responses
were also received where, for example, more than one
person in a given firm had completed the survey.
A total of 795 valid responses remained at this stage
(2008 – 533) of whom 411 were exporting currently
(2008 – 375) and 384 were non-exporters (2008 – 158).
Separate reports have then been produced covering (1)
those firms that considered energy as their most
important sector and (2) all other businesses.
StratMoS (STRATegic demonstration project for
Motorways Of the Sea) is an operational project of
twenty nine partners under Interreg IVB North Sea
Region Programme. This programme focuses on
encouraging and supporting transnational cooperation in
the seven North Sea Region Programme countries, which
include the UK and Norway. The Programme is financed
through the European Regional Development Fund
(ERDF), its Norwegian equivalent and contributions from
all of the countries involved.
The StratMoS project’s core aims are to promote and
facilitate cargo by maritime based intermodal transport,
and improve accessibility within the North Sea Region
by supporting the implementation of Motorway of the
Sea (MoS) and related transport networks in an
integrated logistical chain.
The project has continued previous work on the Northern
Maritime Corridor idea, which seeks to promote regular
shipping services from Continental Europe and the UK
sailing up the Norwegian coast to the Barents Sea and
North West Russia. The local StratMoS Partners,
Aberdeenshire Council and Aberdeen City Council, are
promoting the North East of Scotland as the UK’s
Northern Gateway to this region and ship calls on this
route are increasing.
The project is pleased to support this Export Survey as it
highlights the importance of the key trade links for
Aberdeen City and Shire that need to traverse the
Northern Maritime Corridor route in order to get to market.
www.stratmos.com has further information on the many
and varied activities of the project. Please contact any of
the Aberdeenshire or Aberdeen City contacts named
there for further information.
25
The Aberdeen City and Shire EXPORT SURVEY 2010
26
THE ENERGY SECTOR
27