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North East Subsea Oil Sector Set for Growth

08 September 2010

The subsea oil sector in the North East is set for a big growth spurt which could create thousands of jobs as companies bid for £1bn of new work.

And the chief executive of industry group Subsea UK says the skills of the region’s world-class companies will be in great demand by the emerging offshore wind industry providing a further jobs boost.

However, Alistair Birnie cautioned of a looming skills shortage with newly-qualified graduate sub-sea engineers now able to command starting salaries in excess of £60,000, and some double that, as competition for skilled staff heats up.

He is on a two-day visit of the specialist firms in the region which work on projects, such as recovering oil and gas from underwater reserves and laying underwater cables, and currently employ around 5,000 people.

There are more than 50 companies in the sector which are estimated to contribute over £200m to the regional economy and these include world leaders, such as Wellstream, Duco, Bel Valves and SMD, all of Newcastle.

Mr Birnie said: “Many projects were put on hold during the recession but these are now being turned back on by the oil companies.

“There are bids in for around £1bn of work with the sub-sea trenching and robot companies, such as SMD and CTC Marine, of Darlington, being particularly busy. The UK is the global leader in sub-sea work and the North East is at the heart of this work. We expect to see the revenues grow by 50% over the next five years with the North East taking a good proportion of this work.”

He said the unique skills developed by some of the regional companies are ideally suited to the emerging offshore wind industry.

Major manufacturers, such as Siemens and Mitsibushi are currently looking at establishing turbine factories in the region, and US company Clipper is building the world’s biggest turbine blades factory on the banks of the Tyne.

Mr Birnie said most in the sector felt that progress on wind turbine developments would need more public sector support to get off the ground.

And he said he believed the private sector was currently waiting for some clarity from Government which may become apparent after the Spending Review in October. “The sector could be employing 15,000 people within a few years with over one-third of these being based in the region,” he added.

One of the major challenges now facing subsea companies was recruiting skilled staff, he said.

The disciplines of marine, mechanical and structural engineering were the sources of sub-sea talent but with not enough graduates coming through starting on high salaries and doubling this very quickly.

“This is proving to be a problem with some salaries doubling as we see the poaching of talent between firms”, said Mr Birnie, and he predicted that more exacting safety requirements following the BP Gulf of Mexico oil spill should increase demand for the equipment produced by the region’s companies.