Collaboration Remains Essential for UK Oil and Gas Sector


It is that time of year when the lull in real business action for the festive period gives many people the time to pause and reflect on what has been achieved or what is in the pipeline. It is the time for predictions and reports.

One such report that hit my desk recently was the annual survey published by Deloitte and Oil and Gas UK, and the central theme was a topic that has been a staple of the event calendar this year, namely collaboration.


The report found that the appetite for collaboration continues to be positive with over 90 percent stating that it remains crucial for the future success of their business and to their reputation. While Nearly half of respondents do not believe their organization can make effective use of digital to support effective collaboration. However, there has been some increase in the intention to use new digital technologies increasing from 8 percent to 14 percent – this is still a low base.

Activity levels in the UKCS are slowly picking up, and some oil and gas companies are now starting to post positive financial results – further supported by the recent increase in oil prices. Operating in the mature North Sea basin is still challenging, and many businesses are still struggling to keep their heads above water.

Cost management

Prudent cost management in recent years and a strong focus on improving operational efficiency have led to significant reductions in lifting costs. These topics continue to dominate boardroom conversations, alongside renewed interest in investment opportunities driven by returning confidence in the sector.

Since the Wood report in 2014, supply chain collaboration has been recognized as critical to transforming the business performance of the UKCS. Industry-wide initiatives to promote improvements have undoubtedly played a pivotal role in raising awareness. They include the work of the Efficiency Task Force (ETF), focusing on Cooperation, Culture & Behaviours, and the Engineering Construction Industry Training Board (ECITB), which developed the Project Collaboration Toolkit to provide guidance on best practice for collaboration in the oil and gas industry.

Increased efforts

“This year’s survey results should prompt the industry to redouble its efforts and build on the positive changes seen in the past three years.” Graham Hollis, senior partner for Deloitte in Aberdeen, said. “This would entail extending them across the basin and making them ‘business as usual’ so they add value in an upturn as well as a downturn.

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

“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.”

Encouraging results

Commenting on the survey findings, Oil & Gas UK’s Supply Chain and HSE Director, Matt Abraham, said: “It is encouraging to see that for most operators and supplier’s collaboration remains a crucial priority, despite tough business conditions. This is reflected in the index, with the highest ever score being maintained as business activity improves. This gives us confidence that cultural change is being embedded and will stand us in good stead as we continue to improve the competitiveness of the basin.

“We have seen some positive news for the industry this year, with more projects approved in 2018 than in the last three years combined along with more attractive investment conditions for the basin, but we cannot become complacent. OGUK’s Efficiency Task Force remains focused on driving further business improvement through collaboration and shared learning.”