LONDON – Deloitte’s recent survey of oil and gas operators and oilfield services companies has found that a lack of effective supply chain collaboration means companies are missing out on maximizing the potential value from the UK continental shelf (UKCS).
The survey found that 74% of respondents said collaboration was an integral part of their day-to-day business. Only 27%, however, reported that the majority of their efforts resulted in a successful outcome. Cost reduction was found to be the main driver for collaboration today, with nearly one-third (31%) of company respondents in agreement. Also, 90% said that supply chain collaboration would also play a greater role in their company’s success.
“While it’s encouraging that collaboration is seen by the industry as an important tool in helping companies succeed in maximizing economic recovery of the UKCS in line with the Wood Report, there’s clearly work to be done, and fast, given the current tough environment,” said Nick Clark, a director in Deloitte’s consulting team and contributor to the research.
“The industry needs to address a number of practical, cultural, and behavioral barriers that are standing in the way of realizing this successful future,” he continued. “These include fundamentals such as a lack of effective financial incentives, a lack of clear communication, and misalignment of expectations between operators and service companies in execution.”
Deloitte said that the most critical finding highlighted the discrepancy between what drives successful collaboration, and the actions of leadership and business processes to underpin it. While there was clear recognition of the value of collaboration and what’s needed to make it happen, trust and mutual benefits for example, less than 10% said that leadership regularly emphasized its importance or included it in their business strategy.
Despite this, 20% of respondents still said they actively sought out opportunities to collaborate, which shows that the potential is there if the right leadership and incentives are in place.
Deloitte suggested that while industry must take the lead to make collaboration effective in the UKCS, it should look to the regulator, the Oil and Gas Authority (OGA), and Oil & Gas UK (OGUK), the industry trade body for support. It also pointed out that initiatives like OGUK’s Efficiency Task Force can be a real driver for positive change.
“Collaboration is crucial if we’re to fulfil Sir Ian Wood’s vision to maximize economic recovery from the UK continental shelf,” Oil & Gas UK’s Stephen Marcos Jones, business development director, commented. “That is why Oil & Gas UK has put in place an Efficiency Task Force - championed by leaders from across the industry - we hope this group will challenge existing behaviors and be a catalyst for pan-industry improvement, in addition to the extensive work being undertaken by companies individually.
“Thirty years ago, health and safety was the major focus for the North Sea, and the industry made that a central tenet of its culture – for collaboration to succeed, it has to be addressed with the same urgency and senior leadership,” Clark continued.
Regional Report, North Sea