Role of small businesses in Australia’s oil and gas industry

Analysis

Role of small businesses in Australia’s oil and gas industry

An important economic contribution across the supply chain

The Australian Petroleum Production and Exploration Association engaged Deloitte Access Economics to examine the economic contribution of small business suppliers to Australia's oil and gas industry, their role in regional Australia and their use of new technologies across the supply chain.

Overview of small business suppliers in the oil and gas industry

Almost half (47%) of suppliers engaged by oil and gas companies are small businesses. Overall, these small business suppliers made a total economic contribution of almost $1.4 billion in 2017-18. This was comprised of around $710 million in direct contribution to Gross Domestic Product from the small businesses’ own operations, and a further $650 million of flow-on economic activity that is indirectly supported through these small businesses’ purchases of inputs. As a result of this economic activity, the total employment supported by small business suppliers is around 10,500 full-time equivalent workers.

Regional small businesses working with the oil and gas industry

Small businesses in regional communities work with oil and gas companies across a range of goods and services supplied. They may have a geographic competitive advantage in providing smaller-scale repairs, maintenance and support services in exploration and extraction for oil and gas projects in their local area. Regional small businesses can also be well-suited to providing the local accommodation, transport and hospitality services that are required to support oil and gas workers who reside in these areas as part of their employment in production and processing activities.

Small business technology and innovation in oil and gas

Given growing applications of data-driven and automated technology in the oil and gas industry, there is great scope for small businesses in Australia to contribute to innovation in this field. Small businesses are generally able to be more agile in their innovation, which means they can collaborate with research partners and international providers to develop best-practice solutions, and then tailor their supply of new technologies to support efficiency gains for particular companies and projects. This is particularly important in disruptive technologies such as AI, robotics and sensor networks.

Methodology note

This note summarises the research and modelling methodology applied in this project, with a focus on the economic contribution analysis. To inform this analysis, Deloitte Access Economics conducted a survey of oil and gas companies in order to gather the required modelling inputs. The 15 oil and gas companies in Australia that were surveyed represented approximately 50 percent of the industry’s total supplier expenditures in 2017-18, and include oil and gas companies of various sizes.

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