Infrastructure sharing in troubled times

I didn’t go to OE this year. I don’t think I was alone. From the reports I’ve heard things were quite subdued, except there were many people looking for work, apparently we are approaching 70,000 lay-offs in the UK Oil and Gas industry since 2014. Reports in yesterday’s guardian suggest that there is still more job cuts to come. This report in CITY AM – shows how the perception in London is being shaped and the urgency of the situation is being lost. CITY AM quoted job losses of only 5,500, and for many of the casual money men down here, that is all they will read.

The oil price is low. I remember when it was less than 25% of the current price– this report from the independent reminds us of $9 oil. In 1998 we also had the Asian currency crisis which started in 1997, what could a 75% drop in price do? With the recent wobbles in the China market, and talk of the commodity super cycle that wasn’t in the FT, is market perception changing, and perhaps there is further to fall?

I was pleased to see that Andy Samuel was quoted welcoming the efficiency task force – but I fear that these cross-company committees will be slow and ponderous. I also fear that operators will see this as a way to try to squeeze supplier prices and hurt the value chain. In my opinion, urgent structural change will be required to enable us to extract the resources that lie under the North Sea. Urgent because we need to maintain the infrastructure that will enable the extraction. This is a national opportunity and one that requires a national regulated response.

Andy was quoted as saying “The ETF is taking a three pronged approach to drive greater efficiency under the themes: Business Process; Standardisation; and Cooperation, Culture and Behaviours.” – Well frankly I don’t think this will be enough. I think the OGA must act, and use the powers it has (or obtain the ones it needs) to enable this. Of course, action like this is for the brave. Look at the trouble the control of access tariffs had in Norway, with investors suing the state. There must be questions about this with the recent private equity stakes being taken in CATS , FUKA and SIRGE – in one way this simplifies the access rights and can serve the needs of the customer better, but in another it centralises power in a way that only quick regulatory intervention can balance.

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Entrepreneur, Management Consultant, Technologist - Interested in all things Upstream Oil and Gas, New Ventures and Projects.