EIC report highlights supply chain challenges

The UK-based Energy Industries Council (EIC) has released its eighth annual Survive and Thrive report, which finds that ongoing geographic and policy uncertainties are posing challenges for the global energy supply chain

The report notes that only 7% of companies are venturing into new markets, high costs and insufficient government support being 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. Another obstacle is payment delays, which create severe cash flow issues, hindering investment in new technologies and expansion efforts, the report finds.

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.

Shift to uncertainty

“2024 sees a shift from boom times to an environment filled with uncertainty, as companies grapple with increased policy and geopolitical challenges,” Stuart Broadley, CEO of the EIC, commented.

“While opportunities abound, the lack of clarity on financial incentives and regulations makes navigating these waters increasingly complex. While activity across the energy supply chain remains high, companies are facing significant hurdles due to policy uncertainties.

“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.”

“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.”