In a bid to effectively confront the current challenges besetting the global oil and gas industry, industry watchers have called for the consolidation of processes within the sector to deliver operational excellence as well as eliminate the inefficiencies bedevilling the system.
In a statement made available to the press, Pedro Guerreiro, Head of Sales: Energy & Natural Resources at SAP Africa, noted that the oil and gas industry has a rich history of tough fights and volatility which has not stopped it going where the resources are, no matter how wild, deep or challenging the environment. However, this tenacity may be floundering in the face of the combined challenges of newfound shale gas reserves in the US, the slowdown of China’s economy and political instability in several oil-rich areas, particularly around the Middle East and North Africa.
Ironically, while the consequences on the oil and gas industry include oversupply, huge budget cuts in exploration and production, continued staff layoffs and, in some cases, the total exiting of certain geographies, the gas boom is also plunging gas prices to an all-time low.
Guerreiro says there may yet be breathing room in upstream oil and gas as the industry is shifting from a “produce at all cost” mindset to one that favours producing in context. He said: “Production management has become a number one priority as companies move from traditional volume growth to squeezing their investments.”
According to him, “This approach implies that companies are keen to sweat their assets, better manage inventories, aggregate buying across divisions, increase midstream and downstream investment which are still largely untouched by market turmoil and make efficiency a call to action.”
Embracing the leaner approach requires large cultural shifts within oil and gas organisations. It also needs the right technology platform, such as the SAP oil and gas software, that can help shift the focus from volume to value. Through a modern business technology solution, oil and gas companies are able to gain a real-time overview of their operations.
The enterprise software chief continued that a company can discover many hidden efficiencies in its systems by gaining a 360 degree view of operations. He noted: “This starts at the data collected from intelligent wells, determining volume and trending their future performance. It continues through the discipline of asset maintenance and predicting failures, managing staff concerns such as safety and training, reducing inventory overheads, taking advantage of aggregated equipment buying across divisions, as well as covering typical enterprise concerns such as governance, finances, integration and content management.”
SAP is the world’s leading provider of sector-specific software solutions. So far, over 800 companies have adopted its advanced software platforms with clients in the oil and gas and energy sectors including ExxonMobil, Shell, BP, PetroChina and Total, which collectively generate over 70 million barrels per day. Reports show that companies using SAP software record 22 percent higher asset productivity, nearly 50 percent reduced downtime, 30 percent in annual savings due to aggregated purchases and a 79 percent drop in employee turnover on the average.
