FOCUS 6
However, the trend towards outsourcing has left the energy sector with a project management problem. Outsourcing expertise has resulted in too little control on projects, Beth argues. “The large companies need to become skilled systems integrators rather than tacked-together, contracted-out operators and to demonstrate more overall control in project design, monitoring and – importantly – safety.”
“I think companies will have to reconsider their position to meet shareholder concerns,” she says. “Clearly they can’t take everything back in-house. We now have global service companies that represent viable economies of scale, with enormous expertise and individuals who can transfer knowledge from one project to another. The industry isn’t in a position to jettison these but investors want to see far better project control as a priority.”
So what changes are needed? Beth argues that the market will always have a place for large- scale, upstream specialists or conglomerates with very good assets, but the large, integrated company model – the proxy national oil company model – isn’t sustainable in her view.
“ “
WE HAVE SEEN A NUMBER OF TACKED- TOGETHER, CONTRACTED- OUT OPERATORS EMERGING, WITH LESS OVERALL CONTROL IN PROJECT DESIGN, MONITORING AND – IMPORTANTLY – SAFETY.
Driving these changes will require considerable talent and fortitude at executive level. “You have to have a chief executive who is willing to entertain new ideas and we’re beginning to see signs that the industry recognises the importance of adding value, rather than relying on size. One of the fi rst things Peter Voser said when he arrived at Shell was, ‘Measure me by cashfl ow growth rather than by volume growth.’ We need to see more of that at the top,” she says.
However, the sector currently suffers from a talent problem across the board. Large oil companies and service companies have found it diffi cult to attract young engineers and technology specialists. “The talent issue is going to require considerable focus as we move into an era where technology is increasingly a differentiator for success,” says Beth.
Anthony Lobo Partner, UK Head of Oil & Gas, KPMG Tel:+44 (0)20 73118482
anthony.lobo@kpmg.co.uk
Click here to view the What Next For The Oil and Gas Industry? Chatham House report
THERE ARE A NUMBER OF DIFFERENT BUSINESS MODELS WHICH COULD HAVE INVESTOR APPEAL. IN TERMS OF THE MID-SIZE COMPANIES, IF THEY HAVE A GOOD GROWTH PROFILE, THEY CAN BE VERY APPEALING.
© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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