UK: Making The Most Of UKCS - Collaborating For Success

Last Updated: 24 February 2016
Article by Geoff Gibbons

Most Read Contributor in UK, August 2017


Welcome to the first edition of the Deloitte Collaboration Review and Index.

Nowadays, collaboration is a buzzword among those   operating on the UK Continental Shelf (UKCS) – the Wood Review called for closer collaboration and Deloitte's Making the most of the UKCS: Cultural shift key to maximising economic recovery of oil and gas (2014) also identified it as a key tool for ensuring the basin's future. Since oil prices started falling and improving operational efficiency became a top industry priority, collaboration has regularly been cited as a cure for many of the basin's problems at conferences and roundtable discussions.

Many in the industry speak about collaboration, but it is not actually clear what the word means and what activities and behaviours it covers. While much has been said and written about collaboration in other industries, such as the automotive industry, there is no data and little research in the oil and gas sector.

Our report fills this gap by providing actionable data and an independent view on this frequently discussed topic. It focuses on collaboration between operators and the supply chain. During the summer of 2015, Deloitte conducted a confidential industry survey. We then presented the survey data and findings at industry conferences, roundtable discussions and meetings with select companies and industry bodies over the autumn

The report, which consists of three parts, explains the findings in more detail and includes insight –   anonymised – from our presentations and discussions:

  • the Collaboration Review covers the level and quality of collaboration across the UKCS and discusses success factors and barriers to collaboration
  • the Collaboration Index (Index) measures the effectiveness of companies as partners in collaboration and therefore can be used as a tool for measuring efficiency. While individual company scores are kept confidential, the aggregated Index scores published here give a general indication of how effectively operators and the supply chain currently collaborate. Comparing scores from future surveys will help assess the impact of efficiency efforts to improve collaboration in the basin – as encouraged by the Oil & Gas Authority, the UKCS regulator, and Oil & Gas UK, the industry trade body
  • the Framework for Action provides four guiding principles that companies can follow to make collaboration more effective

It is our hope that this paper contributes to the future success of the UK oil and gas industry. We would like to thank the survey participants and Oil & Gas UK for providing us with their views and welcome any feedback.

Executive Summary

Survey participants said they collaborate to a high degree with their suppliers or customers in the UKCS. The majority also believe that collaboration will be crucial for their company's future success. Currently, collaboration between operators and the supply chain is mostly driven by the need to reduce costs.

However, most participants are not satisfied with the   quality of collaboration, with dissatisfaction running particularly high among suppliers. This is a major cause for concern, in that most companies primarily collaborate to reduce costs. If companies are dissatisfied with the quality of collaboration, they could be missing out on significant opportunities to rein in their spending.

What stands in the way of successful collaboration? The main reason is that collaboration means something quite different for both operators and the supply chain, and therefore their incentives are misaligned. Many also blame aggressive or adversarial commercial behaviours and a general culture of neither listening nor communicating. Some of these behaviours could be driven by rigid, centralised company structures of large international companies that could also be associated with 'siloed' working practices.

Collaboration in many oil and gas companies is left to 'heroes': those few trusted individuals, who actively look for opportunities to collaborate and ensure that their partners share the benefits.

However, we believe that companies should do more to foster a collaborative environment through leadership, targeted strategies, allocated resources and personal objectives linked to rewards. Successful collaboration depends on encouraging workforce to focus on the end-result, sharing goals and empowering staff to   accept compromise, rather than systems and processes.

The Collaboration Index 2015 score is 6.1 out of 10. Although this is positive, it clearly shows that there are opportunities for improvement. While a good brand and reputation promote collaboration, both operators and the supply chain should do more to improve financial incentives and contractual terms to encourage collaboration. Our survey data shows that operators especially need to improve in areas that foster innovation – such as seeking out new ideas and solutions, or implementing change effectively.

Collaboration is a tool that needs to be used as and when it helps address an issue. We cannot collaborate with everyone all the time: collaboration has to be specific and focused. But, creating a culture and organisation where the workforce is empowered and incentivised to collaborate will be crucial in reducing   costs and improving efficiency across the basin.

Download - Making The Most Of The UKCS - Collaborating For Success

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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