Aker Solutions CEO: Oil Sector Should Simplify Tenders To Cut Costs

Reuters

STAVANGER, Norway, Aug 26 (Reuters) - The oil industry could cut down costs by simplifying the process of tendering for contracts, the chief executive of Aker Solutions, a major supplier to oil companies, said on Tuesday.

Oil and gas producers around the globe are cutting back spending plans to save cash after a decade-long spending bonanza cut deep into margins and reduced cash available for dividends.

"It's the entire chain of supplies that needs to be optimised," Luid Araujo told Reuters.

"One problem is the way the industry has been set up for tendering. I think a question that needs to be addressed is what we are going to do to eliminate or reduce the tender costs."

He said oil companies and their supplies conducted tenders for every contracts on offer, which takes time and costs money.

"We should be moving more towards frame agreements with something like five-year tenders, where you have a long horizon to work with your own suppliers," he said on the sidelines of an oil conference.

The oil industry could also be better at adopting new technology, he said.

"In this sense we are not a very brave industry. People like to see somebody else use new technology first. It takes too long for the industry to fully adapt new technology," he said.

Aker Solutions was recently split into two firms: one called Akastor, that incorporates the units for drilling, oilfield services and process systems, while the other includes the subsea, umbilicals, engineering, maintenance, modifications and operations divisions and will keep the Aker Solutions name. Araujo heads the latter.

(Reporting by Joachim Dagenborg, writing by Gwladys Fouche)

Copyright 2017 Thomson Reuters. Click for Restrictions.

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