Big Oil Firms Crack The Whip Over Service Companies

"Over many years people have become very inward thinking and believe the processes they have built up are the Holy Grail," said Ashley Heppenstall, the CEO of Swedish oil firm Lundin Petroleum.

Rising oil prices had also masked the sector's eroding competitiveness and energy firms grudgingly swallowed cost blowouts or delays without revising their contracting models.

"We have seen what .... we refer to as 'gold-plating', specifications beyond what is really required," Kristian Siem, the chairman of Britain-based Subsea 7 said.

"There is a lot of 'it is nice to have' but not 'need to have'. If you eliminate that, that is where the big cost is."

The Sverdrup Way

Norway's Statoil, last year's most successful offshore explorer, has already taken a leap in cutting costs.

It told Aker Solutions to reduce engineering costs by up to 30 percent, potentially $900 million, in the initial phase of its Johan Sverdrup oilfield, a North Sea giant with up to 2.9 billion barrels of oil.

To get that kind of saving, Aker Solutions has to get involved earlier than in past projects, combine work with another field and reuse design elements from past projects - instead of starting from scratch, Chief Financial Officer Leif Borge said.