North Sea Collaboration Drive Flagging as Focus on ‘Right Behaviours’ Slips

THE drive to encourage greater collaboration in the North Sea has stalled sparking fears teamworking could be forgotten again if the recent increase in the oil price is sustained.

The slump in the North Sea triggered by the crude price plunge between 2014 and 2016 encouraged firms to work together in the recognition competitive behaviours developed in brighter times could hinder efforts to fight back.

Oil services tycoon Sir Ian Wood said greater collaboration would be vital in the North Sea in his landmark report into maximising recovery in the area.

However, a study by Deloitte and Oil & Gas UK found the extent of collaboration flatlined this year after two successive increases.

The latest study covers a period during which signs of recovery became apparent in the North Sea, with majors such as Shell and BP approving developments following the partial recovery in the crude price from late in 2016.

The improvement in the market may have resulted in oil and gas firms starting to lose interest in the collaboration agenda.

The authors of the report say its finding suggest “the focus on the right behaviours may have slipped somewhat”.

The implications could be alarming as the North Sea fights for investment with other oil and gas basins around the world.

The North Sea acquired a reputation as an expensive area to work in. Industry players have worked hard to slash production costs since 2014.

“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,” said Graham Hollis, senior partner for Deloitte in Aberdeen.

He added: “This year’s survey results should prompt the industry to redouble its efforts.”

The authors of the study concluded that the appetite for collaboration remained high in the North Sea without that having much impact on behaviour.

They said: “Over 90% of respondents recognised that collaboration was integral to business performance, however many found it difficult to achieve in practice.”

Just 36% of respondents said more than half of their collaboration efforts were successful against 43% in 2017.

Industry players seem to be attached to established ways of working which may not be the most appropriate.

The report notes: “Our discussions with industry suggest that a bias towards cost reduction remains and that overcoming traditional ways of working built up over many years remains a big challenge.”

Only 55% of respondents agreed their organisation had the digital capabilities to drive collaboration.

“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,” noted Mr Hollis.

“Organisations do not necessarily need large upfront investments of time and capital to test and roll out new technologies and processes.”

However, the wave of mergers and acquisitions activity seen in the North Sea in the last two years may provide long term support to the collaboration drive.

Read more: Scots oil services firm bought by London investors

“Such [ownership] changes could be critical to breaking through some of the barriers, specifically historical behaviours that inhibit collaboration and performance improvement,” the report noted.

Independents such as Chrysaor have acquired assets from majors.

Oil & Gas UK’s Supply Chain and HSE Director, Matt Abraham, was encouraged to see the collaboration index reading remained at a record high of 7.1, against a maximum of 10, but warned the industry could not become complacent.

The reading was 6.6 in 2016. It was 6.1 in 2015, the first year covered by the study.

Source: www.heraldscotland.com