Oil firms urged to up collaboration as confidence returns

● North Sea industry needs to redouble efforts as investment in basin steps up

Businesses in the oil and gas industry have today been warned not to become complacent about the need to collaborate to improve North Sea competitiveness as activity levels rise.

The latest survey of North Sea suppliers and operators by Deloitte and industry body Oil & Gas UK found that levels of collaboration between firms have flatlined since last year despite strong appetite for greater working together.

Graham Hollis, senior partner for Deloitte in Aberdeen, said the survey findings should prompt the industry to “redouble its efforts” and build on the positive changes seen over the last three years.

“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,” he said.

Oil & Gas UK’S supply chain and HSE director Matt Abraham welcomed the fact that the collaboration score had remained at a high level for a second year running.

“This gives us confidence that cultural change is being embedded and will stand us ingoodsteadaswecontinueto improve the competitiveness of the basin,” said Abraham.

He also said it was encouraging to see that for most operators and suppliers, collaboration remains a key priority, despite tough business conditions. “We have seen some positive news for industry this year… but we cannot become complacent,” he added.

Over 90 per cent of respondents said they believed collaboration was integral to business performance, but 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 per cent in 2017 to 36 per this year.

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

Hollis said he had expected to see greater awareness among respondents about the value of digital technologies 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,” he pointed out.

The annual collaboration survey was launched following the Wood Review of 2014 which highlighter greater industry collaboration as critical to transforming the performance of the UK Continental Shelf.

Recent investment announcements in the North Sea where collaboration has been cited include the redevelopment of the Penguins field by Shell and Exxonmobil.

In a separate announcement, Decom North Sea (DNS), the trade body for the oil and gas late life and decommissioning sector, has secured a £5 million Decommissioning Challenge Fund grant from the Scottish Government. DNS said it has been pursuing a more collaborative approach.