A Powerful Partners Hip in the Pipeline; with the North East Becoming an Increasingly Attractive Base for Aberdeen Oil and Gas Companies, Moves to Establish Closer Links between the Two Regions Are Gathering Momentum. PETER McCUSKER Reports

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Byline: PETER McCUSKER

IT'S not a competition between the two North Easts. Aberdeen is well-established as the oil and gas capital of the UK but its needs partners.

"The North East of England has the capabilities to work closely with Aberdeen. The two North Easts can work together and complement each other," says Kenny Paton, one of Aberdeen's most prominent oil and gas lawyers.

His views are shared on Tyneside where the NewcastleGateshead Initiative (NGI) has launched a drive to establish closer links between the two regions.

Catherine Walker, inward investment director at NGI, said: "The North East market has historically competed with Aberdeen but our new approach is to work collaboratively with its businesses.

"Aberdeen is becoming increasingly aware that the North East is the place to be when it comes to innovation and technology."

In the last 18 months there have been a number of Aberdeen arrivals in the region and they highlight three things which attract them here; location, skills and transport links.

After a decade of what appeared to be terminal decline the North Sea oil and gas industry is on the up after being boosted by a series of Government tax breaks. In 2011 spending in British waters by oil companies was PS8.5bn, this is projected to be PS13.5bn this year with an extra PS100bn spent by 2020.

Industry body Oil and Gas UK expect production volumes of one and a half million barrels a day this year rising to about two million barrels a day by 2017. Consequently the Aberdeen economy is booming. Unemployment is down to 1% in Aberdeenshire leading to wage inflation in the oil and gas sector.

Businesses in Aberdeen are also struggling to find space with lots of growing businesses competing for the same land and offices.

As investment levels began to increase in late 2011 a noticeable new trend developed with more firms expanding south of the border.

One of the first to arrive on Tyneside was Flexlife, oil and gas industry specialist in subsea project and integrity management. It has grown its headcount from three to 28 in its first year.

Andrew Lake, director of operations in Newcastle, said: "It's very difficult to get the staff in Aberdeen. The North East has a long history of doing and making things and its people have played a significant role in creating some landmark innovations over the years.

"From Vickers and the shipbuilding industry and the larger companies it is now evident in subsea companies, such as Wellstream, Bel Valves and Duco.

"These are now the ones developing ground-breaking technology. Newcastle is the place to be for innovation design and manufacturing, Aberdeen is more focused on project management."

Flexlife works for some of the oil industry's major players and recently announced it had won a PS5m deal with Apache North Sea.

The contract, for the integrity management of the subsea infrastructure and pipelines on the Forties and Beryl fields will be completed by staff in Newcastle and Aberdeen.

Just a few weeks ago Aberdeen-based oil and gas specialist haulier Grampian Continental announced the opening of a base in Bedlington, creating six new jobs. The company, which also has bases in the Netherlands and Italy, operates a fleet capable of transporting 80-tonne offshore structures.

North Shields man Kenny Haddock heads the new operation. He said: "Although Aberdeen is still seen as the oil and gas capital, we have a lot of expertise and activity going on here in the North East all helping to grow the sector."

Oil and gas player Glacier Energy Services, with bases in Aberdeen and Glasgow, last year purchased Blyth-based Site Machining Services.

This year it will spend PS325,000 relocating its Wellclad division from Newcastle to a new factory in Boldon, South Tyneside, with plans to double staff numbers to 30. …