Three Industry Experts Share How Collaboration Between Operators and Service Providers Can Drive Cost Effectiveness and Increase Efficiency In Oil and Gas Projects in East Africa.
Collaboration among the industry stakeholders can solve the top problems faced by the industry . Fortunately, the oil and gas industry is gradually realizing this.
So I asked three industry experts the following question.
How collaboration between operators (oil and gas producing companies) and service providers can drive cost effectiveness and increase efficiency in undertaken oil and gas projects in Tanzania and East Africa at large?
Sudesh Dewar
“It is of prime importance of having good collaboration between the operators and service providers.The project gets it’s momentum when operator & suppliers / services provider works in one perfect accord. Sharing of complete project details with it’s demands / requirement to be identified at initial stage.
In this scenario the operator needs to identify the total capacity and capabilities of the suppliers or service providers. Over and above should have complete assessment of the additional resources the supplier/service providers can contribute.
Operator needs to share with the service providers the complete insight / planning of the project so as to prepare early for the projects new needs / amendments as it progresses.
A perfect Synchronization between the operator and service providers can overcome any obstacles that may slow down the project. Regular / periodical meetings will be the essence of high speed deliverance of the project. Good collaboration will go a long way working on multiple project without wasting the process time in hiring unknown new vendors. Successful collaboration will bring about greater cost effective achievement.”
Why To Follow? Sudesh Dewar is the managing director of Demps offshore Services , a company helping Exploration and Production and midstream companies with recruitment. The company also have international presence in South Africa. They will be shortly opening our office in Dar es Salaam, Tanzania as well. Over the period of just ten years they are in the position to provide host of offshore personnel for dredging projects, upstream, midstream & downstream.
Mark LaCour
“This is a simple one. So most of this type of work where the service companies are doing work for the operators is done in a lump sum price, the work is bid upon. And the service company has to make sure they make some profits.
So they typically put in additional padding, additional numbers or additional dollars just in case something happens. Like if the job takes an extra day and they didn’t plan for that, they still make money.
Well that drives up the cost for the actual operator. And at the same time, if something bad happens like if it’s supposed to be a three day job and it takes 10, well now the service companies is losing money.
So then they hurry up, try to get it done, which leads to mistakes that leads to people getting hurt. And it leads to inefficiencies in the operation. So the number one way that this could work is if the operators actually, instead of contractually having the service companies bid on work, if they contractually agree upon a margin. So the operator says “I don’t care how much it takes you to do this work, but you’re only allowed to make a 20% profit margin’. Well, now the service company can do a really good job, and if it takes longer, it doesn’t matter. The service company makes money so it can pay its people and keep his equipment at top efficiency. And at the same time, the operator gets the work done at the best possible price and the highest quality of work, which then increases production time. So that’s probably the number one way that the service companies and operators to work together where it’s beneficial for everybody in east Africa”
Why To Folllow: Mark LaCour is the managing director of Modal point. He got started in the oil and gas industry almost twenty five years ago working for the phone company in the East of the United States of America. And he knew absolutely nothing about the oil and gas industry.
That was actually valuable to him. He just didn’t know in that moment because when he got handed all the oil and gas accounts in BellSouth territory. He got handled everything; upstream companies, midstream companies, downstream companies and service companies. So, he got to see the entire industry how it works from beginning to end which is actually really valuable. Most people in our industry don’t know the whole industry, they only the part that they work in.
And about nine years ago, he decided to start my own company which is Modal Point and we were market research company in oil and gas.
” Collaboration between Oil and Gas (O&G) companies and procurement houses (such as AP Central) can drasticall
can help with pricing, expediting, shipping, consolidation, status updates etc. My suggestion is that, It is essential when the end user awards a bid to a company, they not only look at price but research the company they are awarding the bid to. Many service providers are single owned enterprises with no experience, financial issues, etc and will regularly quote low prices but in the short and long term the end user will be negatively impacted due to low quality goods, delay of schedule, no follow up service etc. If there are any issues and they have been paid, the low quality providers will move on and not work with the end user to fix the issue.”
