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Trust, technology and transformation key to re-energising oil & gas collaboration


The oil and gas industry's drive to increase collaboration between suppliers and operators in the UK Continental Shelf (UKCS) has continued to maintain a consistent performance. This is according to an annual survey published today by Deloitte and Oil & Gas UK which includes the Collaboration Index, measuring the effectiveness of companies as partners in collaboration.

 

The findings of the UKCS Upstream Supply Chain Collaboration survey 2018 showed that, while activity levels in the basin were gradually picking up and the appetite for collaboration remains very high, the industry-wide Collaboration Index score of 7.1 has remained the same as 2017. This is a strong sign that the industry can increase efforts to build on the track record it has attained over the past three years.

 

However, suppliers and operators switched places with the operator score falling from 7.2 to 7.0 and the supplier score moving up by the same amount. This means that suppliers were once again scoring higher than operators, as they were in 2015 and 2016.

 

More than 200 people from across the UKCS industry took part in the survey – an increase of 30% from last year with participants working in a wider range of disciplines, from logistics and the supply chain, procurement and operations functions, and engineering and projects to finance, HR and legal.

 

Over 90% of respondents recognised that collaboration was integral to business performance, however many found it difficult to achieve in practice. The number of respondents who said more than half of their collaboration efforts were successful had fallen from 43% in 2017 to 36% this year.

 

Where collaboration was successful, trust was cited as the most important reason followed by mutual benefits that accrue to both parties.

 

Graham Hollis, senior partner for Deloitte in Aberdeen, said: “This year's survey results should prompt the industry to redouble its efforts and build on the positive changes seen in the past three years. This would entail extending them across the basin and making them ‘business as usual' so they add value in an upturn as well as a downturn.

“We expected to see greater awareness among respondents about the value of digital technologies which has the potential to drive a new wave of productivity across the industry. Organisations do not necessarily need large upfront investments of time and capital to test and roll out new technologies and processes.

“Effective collaboration should not be forgotten when oil prices rise and the industry gets busier; this will only lead to a reversal of the efficiency gains of the last three years.”

Commenting on the survey findings, Oil & Gas UK's Supply Chain and HSE Director, Matt Abraham, said: “It is encouraging to see that for most operators and suppliers collaboration remains a key priority, despite tough business conditions. This is reflected in the index, with the highest ever score being maintained as business activity improves. This gives us confidence that cultural change is being embedded and will stand us in good stead as we continue to improve the competitiveness of the basin. 

“We have seen some positive news for industry this year, with more projects approved in 2018 than in the last three years combined along with more attractive investment conditions for the basin, but we cannot become complacent. OGUK's Efficiency Task Force remains focused on driving further business improvement through collaboration and shared learning.”

-Ends-

 

Note to editors

 

The full report can now be downloaded on Deloitte's website.

 

Supply chain collaboration has been recognised as critical to transforming the business performance of the UKCS since the Wood Review was published in 2014. The UKCS Upstream Supply Chain Collaboration survey aims to give valuable insights into the industry through engaging with the industry and undertaking a trusted survey with a robust analytics capability.

 

Other key findings

 

  • 60% of respondents saying that over the next 12 months, their activities will be much more focused on business transformation to squeeze out further savings, rationalise activities and drive real productivity gains. However, 45% of respondents cited legacy structures and bureaucratic complexity as the biggest barriers to transformational change.

 

  • Only 55% of respondents agreed that their organisation had the digital capabilities to drive collaboration. 45% of respondents said they either did not believe or did not know if their organisation has the right digital capabilities. While clear that new technologies form part of an integrated transformation, including business process and people can enable significant productivity improvement. However, many traditional industries do not appreciate the relevance or application of technology to their day-to-day business or how these can change what they do. 

 

  • Technology (32%) and physical decommissioning (26%) as the top choices for areas operators and suppliers can collaborate while filling capability gaps (14%) was a distant third.

 

  • Just over half of respondents have started investing in decommissioning activities which were identified as a clear opportunity for collaboration to help provide a lower cost base.

 

  • Two areas where operators did better this year than last was both their willingness to collaborate and their incentivising of partners to collaborate which were each slightly higher up. The latter was particularly noteworthy as this has consistently delivered the lowest scoring element of the Index across all companies, and because it suggests that operators are gradually starting to reflect changes in their commercial models and contract terms.

 

About Deloitte

 

In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.

 

Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.

 

Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

 

The information contained in this press release is correct



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