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 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 recognized 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.

“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,” Graham Hollis, Senior Partner for Deloitte in Aberdeen, said. “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,” Mr Hollis added. “Organizations 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,” said Mr Hollis.

“It is encouraging to see that for most operators and suppliers collaboration remains a key priority, despite tough business conditions,” Matt Abraham, Oil & Gas UK’s Supply Chain and HSE Director, said. “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,” Mr Abraham added. “OGUK’s Efficiency Task Force remains focused on driving further business improvement through collaboration and shared learning.”

Click here to view the UKCS Upstream Supply Chain Collaboration Survey 2018.