Page 51 - Oil&Gas-AustralAsia-2015-Issue-4
P. 51
W ORLD NEWS
testing US$20 per barrel amid the glut No doubt they are laying off assets such price environment but also remain
in supply and attempts to clear surplus as oil rigs as they cut back E&P but they relevant and flourish. Those who can
production, and on the back of slow will continue to take advantage of the match the call by oil majors to reduce
growth in global demand arising from current lull in the industry to focus on cost and enhance efficiency through
the lagging US and China economies. enhancing safety, security, reliability improving their technical capabilities
Those as bold as or bolder than the likes and performance of existing hard- and discover more innovative and cost
of Goldman Sachs may take a contrar- ware and systems. The focus is more effective ways to do business will sur-
ian view. Oil prices may go up as US on ‘sweating the assets’ rather than vive the challenging times and stand to
shale oil producers find new technol- shopping for new ones to attain greater prosper as the oil markets rebound.
ogies, and cheaper and more efficient efficiency and optimize existing assets Oil majors are under pressure to adjust
ways to produce oil and grow their mar- to reduce costs and enhance efficiency. resources and operations according to
ket share of global oil outputs. OPEC This focus has demanded vendors and oil prices, but the business environment
members may defy Saudi – which may contractors to think out of the box to calls for them to seek new arrangements
not be able to hold production rates deliver efficient services to help oil ma- and partnership models with their
amid downward pressure from low jors and NOCs to maintain operational contractors and vendors to weather
prices - and halt producing oil to main- excellence and drive down costs. the storm together. At the same time,
tain low prices to counter the US shale Another key focus is reducing risk, oil field services and ancillary services
oil revolution, for various economic, which has borne tremendous pressure providers must bring their ‘A-game’ to
geo-strategic, political and indus- on oil majors as the search for oil goes the table and develop their own skills
try-driven reasons. The US Dollar may farther from the shore and in more and capabilities to serve the needs of
go back to more realistic levels against challenging landscapes and conditions. oil majors and NOCs more effectively.
major currencies as Federal maintains New methods and technologies such They must strive to meet the multiple
interest rates to help the tentative US as enhanced oil recovery and floating needs of oil producers to lower pro-
economic recovery. LNG terminals (FLNG) are being used duction cost, manage risks, maintain
All these may combine to drive oil pric- in E&P activities in frontier fields such asset integrity, comply with regulatory
es up and leave those predicting US$20 as in deeepwater areas, ecologically requirements, meet their social obliga-
per barrel oil with eggs on their faces. sensitive regions such as the Arctic and tions as corporate citizens while at the
On the other hand, Goldman Sachs and natural wildlife reserves, and in drilling time remain profitable.
other proponents of cheaper oil prices sites with close proximity to populated Various industry estimates that ineffi-
may turn out to be right. Fact of the areas such as the shale fields in North- ciency contributes to 10% of the cost
matter is, it is anybody’s guess which eastern US. These frontier plays require of production in the oil industry. This
way prices are going. oil majors to focus sharply on reducing reveals that there is large scope for cost
and mitigating risks arising from work- reduction and improvement among the
Silver lining amid the dark clouds ing in these fields. oil majors and also their contractors.
Just as important is ensuring the supply This can be attained through finding
Amid these uncertainties and cutback of human capital, especially skilled new ways of doing things, sharing
in exploration and production (E&P) and technically competent manpower, common platforms and services, in-
activities by oil majors and NOCs, in an industry which is already facing vesting in skills and talents, increasing
one thing for sure is that what goes shortage even before oil prices headed operational excellence and optimizing
down must come back up again. It is south. As technical personnel retire existing assets.
the nature of the beast that there will and the industry grows in sophistica- In this regard, companies providing
be technical correction or sustained tion and complexity, and as unconven- support to oil majors would do well to
recovery that will bring the prices of tional oil plays become the norm, new upgrade their HSE performance, adopt
this valuable, infinite commodity back blood needs to be continuously drawn best-in class standards and best practic-
to more realistic levels that reflects its to ensure there is no dearth of talent in es, introducing performance-oriented
demand and supply. And as the cliché the industry. This is especially crucial KPIs and improving product offering
goes, there is always a silver lining amid on anticipation of the eventual rebound and service delivery. Those who do so
the dark clouds. in the industry which will come sooner will enhance their chance of getting
Before oil prices stage a rebound, oil than later as the fundamentals of the oil contracts from oil majors and NOCs in
majors and NOCs will not sit still. They markets change and energy prices turn these lean times. They will be able to
have been emphasizing and will contin- the corner. shrug off the uncertainties of the low oil
ue to focus on reducing costs, optimiz- True, times are hard in the oil industry, prices and be the first to reap to fruits
ing resources, re-allocating manpower, but this has never been an industry of the industry once prices stage their
and prolonging the usefulness and life for the faint-hearted. Players who are eventual rebound and the oil industry
of assets through maintenance, refur- innovative, cost competitive and nimble stages an uptick in activities.§
bishment, overhaul and upgrading. can not only negotiate their way out
of the strong headwinds of the low oil
A Awww.oilandgasaustralasia.com SEPTEMBER/OCTOBER 2015 OIL & GAS ustral SIA 45
testing US$20 per barrel amid the glut No doubt they are laying off assets such price environment but also remain
in supply and attempts to clear surplus as oil rigs as they cut back E&P but they relevant and flourish. Those who can
production, and on the back of slow will continue to take advantage of the match the call by oil majors to reduce
growth in global demand arising from current lull in the industry to focus on cost and enhance efficiency through
the lagging US and China economies. enhancing safety, security, reliability improving their technical capabilities
Those as bold as or bolder than the likes and performance of existing hard- and discover more innovative and cost
of Goldman Sachs may take a contrar- ware and systems. The focus is more effective ways to do business will sur-
ian view. Oil prices may go up as US on ‘sweating the assets’ rather than vive the challenging times and stand to
shale oil producers find new technol- shopping for new ones to attain greater prosper as the oil markets rebound.
ogies, and cheaper and more efficient efficiency and optimize existing assets Oil majors are under pressure to adjust
ways to produce oil and grow their mar- to reduce costs and enhance efficiency. resources and operations according to
ket share of global oil outputs. OPEC This focus has demanded vendors and oil prices, but the business environment
members may defy Saudi – which may contractors to think out of the box to calls for them to seek new arrangements
not be able to hold production rates deliver efficient services to help oil ma- and partnership models with their
amid downward pressure from low jors and NOCs to maintain operational contractors and vendors to weather
prices - and halt producing oil to main- excellence and drive down costs. the storm together. At the same time,
tain low prices to counter the US shale Another key focus is reducing risk, oil field services and ancillary services
oil revolution, for various economic, which has borne tremendous pressure providers must bring their ‘A-game’ to
geo-strategic, political and indus- on oil majors as the search for oil goes the table and develop their own skills
try-driven reasons. The US Dollar may farther from the shore and in more and capabilities to serve the needs of
go back to more realistic levels against challenging landscapes and conditions. oil majors and NOCs more effectively.
major currencies as Federal maintains New methods and technologies such They must strive to meet the multiple
interest rates to help the tentative US as enhanced oil recovery and floating needs of oil producers to lower pro-
economic recovery. LNG terminals (FLNG) are being used duction cost, manage risks, maintain
All these may combine to drive oil pric- in E&P activities in frontier fields such asset integrity, comply with regulatory
es up and leave those predicting US$20 as in deeepwater areas, ecologically requirements, meet their social obliga-
per barrel oil with eggs on their faces. sensitive regions such as the Arctic and tions as corporate citizens while at the
On the other hand, Goldman Sachs and natural wildlife reserves, and in drilling time remain profitable.
other proponents of cheaper oil prices sites with close proximity to populated Various industry estimates that ineffi-
may turn out to be right. Fact of the areas such as the shale fields in North- ciency contributes to 10% of the cost
matter is, it is anybody’s guess which eastern US. These frontier plays require of production in the oil industry. This
way prices are going. oil majors to focus sharply on reducing reveals that there is large scope for cost
and mitigating risks arising from work- reduction and improvement among the
Silver lining amid the dark clouds ing in these fields. oil majors and also their contractors.
Just as important is ensuring the supply This can be attained through finding
Amid these uncertainties and cutback of human capital, especially skilled new ways of doing things, sharing
in exploration and production (E&P) and technically competent manpower, common platforms and services, in-
activities by oil majors and NOCs, in an industry which is already facing vesting in skills and talents, increasing
one thing for sure is that what goes shortage even before oil prices headed operational excellence and optimizing
down must come back up again. It is south. As technical personnel retire existing assets.
the nature of the beast that there will and the industry grows in sophistica- In this regard, companies providing
be technical correction or sustained tion and complexity, and as unconven- support to oil majors would do well to
recovery that will bring the prices of tional oil plays become the norm, new upgrade their HSE performance, adopt
this valuable, infinite commodity back blood needs to be continuously drawn best-in class standards and best practic-
to more realistic levels that reflects its to ensure there is no dearth of talent in es, introducing performance-oriented
demand and supply. And as the cliché the industry. This is especially crucial KPIs and improving product offering
goes, there is always a silver lining amid on anticipation of the eventual rebound and service delivery. Those who do so
the dark clouds. in the industry which will come sooner will enhance their chance of getting
Before oil prices stage a rebound, oil than later as the fundamentals of the oil contracts from oil majors and NOCs in
majors and NOCs will not sit still. They markets change and energy prices turn these lean times. They will be able to
have been emphasizing and will contin- the corner. shrug off the uncertainties of the low oil
ue to focus on reducing costs, optimiz- True, times are hard in the oil industry, prices and be the first to reap to fruits
ing resources, re-allocating manpower, but this has never been an industry of the industry once prices stage their
and prolonging the usefulness and life for the faint-hearted. Players who are eventual rebound and the oil industry
of assets through maintenance, refur- innovative, cost competitive and nimble stages an uptick in activities.§
bishment, overhaul and upgrading. can not only negotiate their way out
of the strong headwinds of the low oil
A Awww.oilandgasaustralasia.com SEPTEMBER/OCTOBER 2015 OIL & GAS ustral SIA 45
