Nor way uk kazakhs t an cong o columbia aus t r alia

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Unformatted text preview: arly in exploration, the maintenance of existing infrastructure, the fiscal regime and the level of world oil prices. Nor way UK Kazakhs t an Cong o Columbia Aus t r alia Ang ola Indone s ia Malays ia T hailand Dollar/Barrel oil equivalent Figure 3.8: Worldwide operating costs (source: United Kingdom Offshore Operators Association, 2000c, http://www.ukooa.co.uk) In the U.K., these pressures have led the U.K. Government and industry to seek ways to improve the attractiveness of the U.K. in comparison to international petroleum provinces. The U.K. Government introduced the first out-of-round licensing awards in 1992 to facilitate the early development of fields (Department of Trade and Industry, 1998). In the same year, the CRINE (Cost Reduction In the New Era) Network was launched. This is an initiative supported by the U.K. oil and gas exploration and production industry that aims to increase the global competitiveness of the U.K. by focussing on reducing the costs of its participants - the domestic and 50 international operators that operate on the UKCS and the contracting and supply companies in the U.K.. The resulting cost reduction initiative has led to savings of 30% in capital and operating costs (Department of Trade and Industry, 1998 p4). In 1996, CRINE turned its attention to competitiveness in a wider sense than cost reduction. The objective became to find ways of enhancing the value of the services and equipment provided by contractors and suppliers to operators not just in field developments but also in field operations. The aim is to extend the commercial life of the UKCS and through improving the global competitiveness of the supply industry, to increase export market share and to secure employment in this sector well beyond the time when U.K. becomes a net importer of oil again. In response, in 1997 the Department of Trade and Industry’s Infrastructure and Energy Projects Directorate commissioned a study on the impact of changing supply chain relations on the upstream oil and gas supplies industry particularly on small, medium-sized enterprises. At the time of the study, supply chain management (SCM) was seen as a set of management processes that could usefully help the industry cope with some of the challenges it then faced. When the oil price dropped in 1998, what was simply desirable became imperative. SCM is now seen as a technique that can make a considerable contribution to the economics of upstream development. The CRINE network SCM initiative has identified cost savings and substantial improvements in value through the implementation of a range of SCM and collaborative initiatives. In parallel with the CRINE network SCM initiative, the Oil and Gas Industry Task Force (OGITF) has been established. The OGITF was launched in November 1998 to address the impact on the U.K.’s oil and gas industry of the low world oil price. The resulting initiatives were announced in September 1999 and include the creation of a new industry body LOGIC (Leading Oil and Gas Industry Competitiveness) which will seek to change fundamentally the...
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