EIC launches Survive and Thrive report
The Energy Industries Council (EIC) has released its eighth annual Survive and Thrive report, highlighting the ongoing challenges faced by the global energy supply chain amidst geopolitical and policy uncertainties.
Persistent challenges such as payment delays of six months or more create severe cash flow issues, hindering investment in new technologies and expansion efforts, the report found.
Without unfettered export finance help, the working capital challenges alone are normally enough to dissuade companies from entering new markets.
Developing client-facing services and solutions has emerged as the most popular growth strategy this year, with 82% of supply chain companies now working directly with operators, increasingly sidestepping the traditional model of contracting via tier 1 EPC contractors.
This shift allows companies to forge deeper relationships with end-user clients and increases the chances of having their technology pre-specified.
For the eighth consecutive year, the Survive and Thrive report notes that the development of new export or international regions remains the least used growth strategy, with only 7% of companies venturing into new markets.
The majority focus instead on domestic or well-trodden overseas markets like North America, Europe, and the Middle East. High costs and insufficient government support, such as lack of financial support and unfavourable tax environments, are major deterrents. Clear policies and trade agreements are essential for making new market entries more feasible, according to the views of supply chain businesses shared in the report.
Stuart Broadley, CEO of the EIC, said:
“2024 sees a shift from boom times to an environment filled with uncertainty, as companies grapple with increased policy and geopolitical challenges.
“While opportunities abound, the lack of clarity on financial incentives and regulations makes navigating these waters increasingly complex. This year we’re seeing a mixed picture. While activity across the energy supply chain remains high, companies are facing significant hurdles due to policy uncertainties. This is a critical time for the industry.”
“Exporting to new markets remains the hardest growth strategy. Government support, with fewer exclusions around oil and gas, is crucial for companies to navigate new territories, many of which have important hydrocarbons activities that are also in transition. Our members are asking for more engagement from trade missions and embassies to provide necessary market access and early clarity on new market challenges such as local content needs.”
“What our members are telling us is that the energy supply chain needs to be listened to by policymakers. Clear and consistent policies, financial incentives, and an understanding of the entire and largely integrated supply chain’s needs are crucial. Policymakers should de-silo energy policy, ensure an overarching target with contributions from all stakeholders, and recognise the impact of increased taxes on operators. Upgrading capabilities to meet net-zero demands, reassessing local content regulations, and providing a clear roadmap for energy projects are essential steps to support and nurture the energy supply chain.”
Image of Stuart Broadley courtesy of the EIC
