Graham Hollis
Graham Hollis

Collaboration becoming new reality as oil and gas industry index returns highest score of 7.1

The UK’s offshore oil and gas industry is putting the recommendations of the landmark Wood Review into practice, according to the findings of an annual sector survey published by Deloitte and Oil & Gas UK today.

The Wood Review identified collaboration as a fundamental behaviour towards securing the successful future of the UK Continental Shelf (UKCS). Now the 2017 UKCS Upstream Supply Chain Collaboration Survey – which sought the views of over 150 operators and suppliers across the UK Continental Shelf – has returned a 7.1 Collaboration Index score (up from 6.6 in 2016), the highest score to date. As part of the survey, the Collaboration Index measures the effectiveness of companies as partners in collaboration.

95% of operators and suppliers say collaboration is an integral part of their day-to-day business (86% in 2016 and 74% in 2015) and 43% of survey participants considered their collaborative engagements successful in 2017 compared to 27% in 2015.

Commenting on the findings, Oil & Gas UK’s Continuous Improvement Manager Dr Mariesha Jaffray said: “The results demonstrate that for most operators and suppliers, collaboration is shifting from being an aspiration to a reality. The third successive improvement to the Collaboration Index score has been achieved despite the prolonged period of flux faced by the offshore oil and gas industry, with many companies still experiencing tough conditions.

“Industry in general has a long-standing record in working together towards shared goals and this survey shows our sector has taken the same approach.  It also underlines the importance of Oil & Gas UK’s Efficiency Task Force, which continues to seek out, promote and provide access to efficient and collaborative practice across the sector.”

Graham Hollis, senior partner for Deloitte in Aberdeen said: “In this year’s results, we are starting to see real progress in terms of improved behaviours leading to more successful collaboration outcomes in the UKCS. The messages on the benefits of supply chain collaboration are starting to be embedded.

“Cost reduction is still the main driver of collaboration, but the focus is shifting from transferring risk to sharing knowledge, new ideas and solutions. The results suggest more openness towards business partners and that more companies are taking a closer look at how they can incentivise collaboration better financially. Engaging suppliers earlier in the project lifecycle is also becoming more widespread.”

The report was launched at an Oil & Gas UK breakfast briefing event held in Aberdeen today. Deloitte, who sponsor the event, took part in a panel discussion exploring the results of the report alongside leading figures from Shell UK and the ECITB.

Underlining the value of collaboration to the sector, Dr Mariesha Jaffray concluded: “Through collaboration companies are able to reduce costs, share knowledge and maximise the economic recovery from the basin. We can speak with tentative confidence that these behaviours are the new normal. Provided these results are built upon, we have every reason to believe that the UKCS will become the most attractive mature basin in world with which to do business.”

Graham Hollis concluded: “While the extended period of lower oil prices has been very challenging, it has also given many companies the impetus to take a transformative approach to their own cost structures and ways of working. Many of these companies are now reaping the benefits of more direct relationships with their partners. Companies now need to accelerate the transformation and embed these new ways of working to ensure their future high performance, regardless of oil price.”