Due to crumbling crude prices, operators have made severe cuts on supply-chain spending. Immediate initiatives such as staff reductions, expenditure cuts and project postponements were put in to place. As a result, service and supply companies has seen their business evaporate. To cope with the decline in activity, the supply industry has been forced to cut back on service offerings, as well as lowering prices by 20 to 30 percent, according to an article by McKinsey in July 2016.
Operators, suppliers and service companies have had to find new and improved ways of working together to respond and adapt to the changing market. Old systems and established ways of working are disrupted and revitalised.
In pursuit of more sustainable cost reduction, capturing new growth and become financially viable again, operators and service companies have transformed their operations, by taking different strategic steps and exploring new business models. Optimising operations, supply chain-collaborations, new revenue models and adopting digital technologies are initiatives that have been embraced.
The oil and gas industry has over the last years been in the forefront of cost-cutting innovation – every stone has been turned to find simpler solutions, standardised products and new business- and contract models. Oil prices are finally stabilising, outlooks are optimistic again, and companies are starting to turn profits. However, one might ask if the cost reductions are sustainable long-term – have cost focus downgraded investments in innovative technologies that might generate revenues in the long run?
Going forward the industry should be prepared to not only survive, but thrive in a challenging oil price environment. Is the industry pursuing the right strategies? Which technological advances are potential game changers of the future energy landscape – and are these technologies implemented rapidly enough?
Get ready for a high-level discussion in the conference session “Evolve or expire. Time for action!”, Monday 27 August 2018.
Hear from top industry leaders:
- Jarand Rystad, CEO, Rystad Energy
- Andrew Brown, Upstream Director, Shell
- Thierry Pilenko, Executive Chairman, TechnipFMC
- Jeremy Thigpen, President and CEO, Transocean
- Silvija Seres, Board Member and Investor
- Lorenzo Simonelli, President & CEO, Baker Hughes
- Luis Araujo, CEO, Aker Solutions
- Thomas Thune Andersen, Chairman of the Board, Ørsted
- Moderator: Maria Moræus Hanssen, CEO and Chairman of the Management Board, DEA