The paper, entitled ‘Committed to change: driving true industry collaboration’ claims that the importance of the ‘lack of trust’ factor is an outlier in Australia compared with results from recent surveys carried out in the UK and the Netherlands on the more mature North Sea oil and gas industry. Deloitte argues that this could be explained by the limited shared working history that service companies and operators have on Australian operational assets, and the negotiation power swing between the recent industry up and down cycle.
Mike Lynn, Deloitte Asia Pacific Oil and Gas Consulting Lead Partner, said: “The buyer-supplier tension inherent in collaboration will need to be taken seriously in order to increase the chances for collaboration effectiveness.
“The Australian oil and gas supply chain has a significant challenge in moving towards a more collaborative industry, but also a unique opportunity. With the project to operations transition of the large gas production and LNG facilities, asset management capability across operators and service companies will become key. The remoteness in the west and distributed coal seam gas (CSG) production wells in the east also impose a high level of interdependency on the sector and strong collaboration is critical for overall success.”
Operators reportedly indicated that reduced costs and the acquisition of knowledge were the two main things that they are seeking to gain from collaboration. Deloitte added that service companies were closely aligned, and provided high scores for ‘filing capability gaps’ and ‘increasing market access’.
With regards to which areas of business they would prioritise for collaboration activities, however, there were a variety of responses. Despite the fact that ‘major maintenance’ and ‘turnaround planning’ were popularly agreed to be high priorities by both segments, ‘logistics’ topped operator responses, whilst ‘production operations’ and ‘plant maintenance’ were identified by service companies.
Lynn added: “The question remains around how to achieve the best outcome.
“From the UK and Netherlands surveys we learn more mature collaboration is characterised by having a clear business strategy, which encourages collaboration and is focused on getting the capability in place which provides a more structural foundation for success, making it less dependent on individuals with existing trusted relationships.
“From our Australian survey we see some supporting signs for these structural measures. The vast majority of respondents from both operators (94%) and service companies (77%) agreed that many business processes typically considered confidential should be standardised to facilitate industry collaboration.”
How can Australian oil and gas companies unlock the value of collaboration?
The results of the survey suggests that companies adopt collaboration ingredients inconsistently, and that an effective ecosystem does not simply naturally evolve in the market landscape.
Lynn commented: “Similar to ecosystems in the natural world, an ecosystem in the business sphere involves multiple layers and stakeholders working together to respond quickly to a situation. Ecosystem thinking often comes up as the way forward for collaboration, though the million dollar question remains as to what that actually means and how to make it work in this context. Capturing the full value in a more holistic way, requires a clear purpose and deliberate design.”
Deloitte has developed a model that is able to help service companies to make a fundamental step change in creating value from collaboration. The structured collaboration ecosystem is based on the four Ps: purpose; participants; platform; and performance. In turn, Deloitte claims that these provide six key fundamental elements: definition; direction; enablement; transparency; trust; and motivation. Deloitte says that these make collaboration an effective and preferred modus operandi in a sustainable way.
Lynn went on to explain that there are essentially five key issues that both supply chains and operators must keep in mind. These are:
- The power to create significant change is held by operators as owner of the overall business value and the ultimate client and buyer of supply chain services.
- Make collaboration an explicit part of your business strategy and ‘business as usual’ in your operations. Leaving it to individual relationships and evolutionary processes is not sufficient. These are inconsistent and not quick enough for Australia, which cannot afford a long road to excellence.
- Move on from the conventional time and materials contracting approach. Use innovative commercial models that encourage collaboration and financially reward the service companies for overall value delivery.
- Look for specific opportunities for collaboration. Operators should consider developing special purpose ecosystems with a high level of delivery interdependency for the longer term.
- Actively solve the ‘lack of trust’ issue. This requires a mind shift in the world of oil and gas, dominated by engineering brains with a natural bias towards ‘mechanical’ solutions to make their business work.
Lynn added: “With the wave of LNG projects moving from development to production, Australia is experiencing a period of hyper growth with total production capacity increasing fourfold in just five years. Significant growing pains can therefore be expected in the asset management capability across operators and supply chain companies. Improved collaboration will be instrumental for accelerated operational excellence. It is encouraging to see the willingness in the Australian sector to embrace collaboration. Together with the learnings from other markets and a framework that provides guidance on structuring and implementing collaborative ecosystems, we have the ingredients in place to increase our global competitiveness through a highly productive supply chain.”
Read the article online at: https://www.lngindustry.com/liquefaction/15052017/deloitte-presents-findings-of-oil-and-gas-collaboration-survey/