Small and medium-sized enterprises (SMEs) are adapting to the expected decline of the North Sea oil and gas industry, according to a study carried out by the Geography Departments at the Universities of Aberdeen and Glasgow.

Project researcher, Dr Andy Cumbers (Glasgow), said: "Given the oil and gas sector's role as a key source of employment and economic opportunities in Scotland, it is important to gauge the extent to which SMEs are using their experience in the North Sea to identify opportunities in other markets. Although our findings on SMEs are encouraging, they do raise concerns about the continuing dependence of the Aberdeen economy on oil and gas."

The research found that many SMEs have been successful in reducing their dependence on the North Sea market by securing contracts and orders in other oil regions. 63.5 per cent of firms stated that they had diversified into overseas oil markets over the last 5 years, and almost 40% of firms now derive more than 20% of their turnover from export markets. Opportunities also exist for firms to transfer knowledge and skills gained in the North Sea into sectors such as other marine industries, energy and water, although the level of turn-over derived from non-oil sectors is lower.

SME representatives did raise concerns about recent industry trends, indicating that the rationalisation of the supply chain was constraining innovation and opportunities for smaller firms. Dr Danny MacKinnon (Aberdeen) stated that "there is a need for future policy to fully incorporate the needs of small business, particularly with regard to support for innovation and market testing."

The research shows that firms generally remain committed to operating out of Aberdeen, even as North Sea activities begin to decline. Professor Keith Chapman (Aberdeen), saw this as a positive indication of "Aberdeen's key position as a centre within oil industry networks."

Elaine Thomson MSP, Chair of the Scottish Parliament's Cross-Party Oil and Gas Group and a member of the Enterprise and Lifelong Learning Committee, described the report as "an interesting and timely piece of research that has come up with some useful conclusions and information for developing policy in the oil and gas sector."

The report has also been welcomed by Scottish Enterprise. Brian Nixon, Director of Scottish Enterprise Energy Group, stated that " this research adds significant detail to previous studies on diversification. Whilst the oil and gas sector brings great benefit to the Aberdeen area and to Scotland as a whole, we must ensure that companies are encouraged and assisted to examine opportunities both overseas and in other industry sectors."

Further information for the media can be found http://newsdesk.gla.ac.uk/pressreleases

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Media Relations Office (media@gla.ac.uk)

Notes for editors: further information and details of the study are available from

* Dr Andrew Cumbers, University of Glasgow, tel 0141 330 2291, email acumbers@geog.gla.ac.uk

* Dr Danny MacKinnon, University of Aberdeen, tel 01224 272335, email danny.mackinnon@abdn.ac.uk

University of Glasgow press office, tel 0141 330 3535

* University of Aberdeen public relations office, tel 01224 272014

First published: 2 October 2001