Register ADIPEC Future Energy Systems International Growth OGV
Diversification tops charts as key growth strategy

Diversification tops charts as key growth strategy


EIC’s CEO Stuart Broadley explains why diversification is so popular, and shares success stories featured in 2021 Survive & Thrive report.

I am privileged to interview many of the world’s top energy supply chain business leaders for EIC’s annual Survive & Thrive reports, the fifth edition of which was recently published, studying business growth strategies employed in challenging market conditions, of which 2020-21 was as hard as it gets.

Diversification is, for the second year running, the number 1 growth strategy employed by leaders to survive and thrive their way out of the market and pandemic crisis. This is especially true for British companies, of which 45% used diversification to spread their risk and explore opportunities in new sectors, while 21% of non-UK companies chose to pursue this strategy.

Diversification is still seen as the easiest growth strategy as it potentially brings faster ROI and allows direct access to lucrative domestic capital projects, energy and non-energy. But this brings the frustrating consequence that companies are once again postponing investments in new export markets, which business leaders feel attract too much risk. Developing new export markets is once again, for the fifth year running, the least used growth strategy, indeed the hardest growth strategy. Export-shyness is a growing disease in the UK and the EIC believes intervention will be needed to reverse this worrying trend.

The research unearths another telling aspect to diversification, that the majority of energy supply chain businesses, although diversifying actively, are still more than 50% reliant on oil & gas for their revenues.

This reduced somewhat in 2020, offset by a like-for-like increase in mature renewables, but this is expected to revert in 2021-22 as the pandemic subsides and the bow-wave of postponed oil & gas projects hits the market again. Seemingly and perhaps surprisingly, all this fevered focus on decarbonisation and moving away from oil & gas during 2020-21 has not yet resulted in material changes to supply chain revenues.

And what about companies diversifying into the new energy transition markets (hydrogen, CCUS, energy storage, etc.)? While 30% of participants are exploring new energy transition technologies (34% for UK companies and 14% for non-UK), investment levels are still normally relatively low. Although everyone is talking about energy transition, few have managed to convert this exciting new opportunity into revenues so far.

In summary, companies are diversifying more and more widely, which is to be encouraged. However, companies when diversifying should be careful not to over invest in new energy transition technologies while the market is still over-hyped and under-fed. They should remember that the oil & gas market is still, in value terms, by far their largest feedstock for the foreseeable future.

For those reading this and considering their own diversification journeys, here are some brief snippets of just a few of the many amazing and inspiring diversification stories that are featured in the full 2021 EIC Survive & Thrive report.

2021 EIC Survive & Thrive report

AIS - A trilogy of diversified triumphs – Expanding beyond oil & gas into buoyancy, offshore wind cable management, and automotive fire protection, with £8m investment in new, state of the art facilities.

Aker Solutions – A cleaner, greener mission – In February 2021, Vattenfall announced that Aker together with Siemens would be their preferred bidder if Vattenfall starts the development project for the Norfolk Offshore Wind Power Zone, valued at approx. £1bn.

Aubin Group – A new low-carbon future – Repurposing its proven oil & gas chemical technology for renewable and water markets, while also developing new solutions to provide more cost effective and lower carbon options for decommissioning oil & gas wells.

Hunt Thermal – Securing a scalable future in multiple markets – Securing their future, building on strong history in oil & gas engineering solutions, into chemical, power generation, nuclear and defence markets, with £1.5m investment in state-of-the-art manufacturing.

JoBird – A drive towards diversification opportunities – Award-winning life safety storage solutions specialists turn attention towards renewable power, securing a £900k Orsted contract, championing the use of recycled materials.

NRL – Delivering NDT expertise to nuclear new build – With start-up mentality, striving to disrupt, they successfully moved beyond reliance on radiography, a move which has opened up significant project awards and helped to futureproof the business.

Petrofac – Meeting changing global energy needs – Embracing new expertise, upskilling their workforce and establishing a dedicated new energy services team, the company is making inroads in CCUS, hydrogen and waste to energy, ranging from Scotland to Australia.

TP Group – Gaining traction in the UK rail sector – Applying 50 years’ experience supplying submarines with carbon capture, electrolyser and fuel cell technologies, now successfully diversified to win first rail sector contract, to deliver hydrogen fuel solutions.

TÜV SÜD National Engineering Laboratory – Aiding the UK’s transition to clean power – As UK’s industrial strategy shifted towards clean growth and away from oil & gas, they successfully developed new flow measurement tools and techniques to secure their future.

Full EIC Survive & Thrive reports found here

Stuart Broadley, CEO of the EIC, is executive author of the acclaimed EIC Survive & Thrive series of annual research reports focused on successful growth strategies used by energy supply chain bosses in challenging markets

Read the latest issue of the OGV Energy magazine HERE.


Published: 15-09-2021

OGV Energy will use the information you provide on this form to be in touch with you and to provide updates and marketing. Please let us know all the ways you would like to hear from us: