Collaboration between suppliers and operators in the UK Continental Shelf (UKCS) has continued to maintain consistent performance of the oil and gas industry, according to an annual survey published by Deloitte and Oil & Gas UK.
Deloitte said that the findings of the UKCS Upstream Supply Chain Collaboration Survey 2018 showed that the industry-wide Collaboration Index score of 7.1 had remained the same as 2017, while activity levels in the basin were gradually picking up.
“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,” the company said.
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.
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.
“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. 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.”
Oil & Gas UK’s Supply Chain and HSE director, Matt Abraham, added: “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.
“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.”
This year’s UKCS Upstream Supply Chain Collaboration Survey stated that 60% of respondents would be much more focused on business transformation to ensure further savings, rationalize activities, and drive real productivity gains over the next 12 months.
However, 45% of respondents cited legacy structures and bureaucratic complexity as the biggest barriers to transformational change.
Deloitte said that only 55% of respondents agreed that their organization had the digital capabilities to drive collaboration while 45% of respondents said they either did not believe or did not know if their organization had the right digital capabilities.
According to the survey, technology (32%) and physical decommissioning (26%) are the top choices for areas operators and suppliers can collaborate while filling capability gaps (14%) was a distant third. Also, just over half of respondents started investing in decommissioning activities identified collaboration as a clear opportunity to provide a lower cost base.
It is worth noting that two areas where operators did better this year than last were in the willingness to collaborate and their incentivizing of partners to collaborate which were each slightly higher up.
The latter was particularly noteworthy as this consistently delivered the lowest scoring element of the Index across all companies, and it suggests that operators are gradually starting to reflect changes in their commercial models and contract terms.