Big Oil Firms Crack The Whip Over Service Companies

Statoil has already experimented with some standardisation on smaller, marginal fields but has not done anything on the scale of Sverdrup, which could cost $20 billion in its initial phase.

"Tailor-made projects needs to be replaced by copy-paste because there's substantial opportunity to just repeat solutions, not necessarily go into mass production, but to replicate solutions that have been used before to reduce costs," Jan Arve Haugan, the CEO of Norway's Kvaerner said.

The new business model means energy firms will work with fewer suppliers, reducing the number of costly and time consuming tenders, and awarding bigger contracts.

They could also reduce overlapping engineering competencies and delegate more responsibility to service firms.

Just this week Schlumberger, one of the biggest players in the sector, said it was taking business away from rivals and that its first quarter was better than it projected.

"Shifting supplier for every project, you will never get efficient processes," Aker's Borge said. "This gives us a stronger position but it also puts your head on the block.... because there's a risk that you invest in a relationship but can't secure the business."

Another risk is that the increased use of standardisation could push firms to develop simpler, less complex fields and leave more complex finds dormant.


View Full Article


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Reid V. Williams  |  April 29, 2014
I totally agree with Ben Lehr. I too have 35 plus years in the O&G Industry worldwide. I was last in Kuwait where a big French Integrated Service Company had a sweet master contract with KOC. They priced items out of sight and KOC didnt say a thing. This ISC MC gave the service company cart blanc to charge whatever, to put inexperienced personnel in place and equipment that rarely worked the first time. Without completion there is a lack of incentive to make positive change. I will never consult with KOC again. .
Ben Lehr  |  April 05, 2014
On integrated services. It does not work, it breeds inexperienced personnel at the well site with very little support from office managers. It is costly and inefficient as the personnel know that they have a contract and they are backed by the service company. The integrated service company will never take accountability for anything, believe me they will try to pass the buck on everything. I work in a project in Central Africa where we have integrated services and|I can tell you with having over 40 years of oil & gas experience from the wellhead to corporate office I have never seen such a disorganized inexperienced and costly operation in my entire career. In my opinion stay away from integrated services and keep the competition at the wellhead.