Energy firms told to look at cost-cutting to save industry

NORTH Sea oil and gas firms must learn lessons from sectors such as car making and fundamentally change the way they operate to ensure the long term survival of the industry, experts have said.

The call came as Norwegian giant Statoil announced plans to shed about 2,000 jobs following the crude price slump but said it was still hiring in Aberdeen.

Accountancy giant PwC identified seven steps oil and gas firms can take to put themselves on a sound footing, based on a study of heavy industries that have faced similar crises. It found car makers made big changes to manufacturing and supply chain practices to control costs.

The steps include developing visionary leaders who build trust and focusing on core activities.

“These seven fundamental steps are pragmatic lessons that have been transformational in other major industries and are highly relevant,” said Gordon Colborn, head of consulting at PwC in Scotland.

The other steps are: treating operations as strategic assets, not simply as a cost: developing an innovation culture; improving processes and IT systems; boosting performance management; investing in skills for the future.

The PwC study was commissioned by Oil & Gas UK, which believes 40 per cent cost savings are needed to secure the North Sea’s future.

A Statoil spokesman said: “Our Aberdeen organisation is still growing, and we will recruit for more positions in months and years ahead.”

Growth will be adjusted to possible new Statoil operating models. Statoil is developing the giant Mariner field off Shetland. It has about 125 employees in Aberdeen.