- Author: Elinor Turander
- Keywords: Oil & Gas
Nearly a quarter of senior oil and gas professionals in Brazil (24%) say they have been highly successful in meeting cost-efficiency targets, compared to 18% globally, according to a new report published today by DNV GL, the leading technical advisor to the oil and gas industry. Cost management will still be the top corporate priority in 2016 for 47% of Brazilian respondents, compared to 41% globally, as the sector seeks to become more efficient.
According to A New Reality: the outlook for the oil and gas industry in 2016, a report from DNV GL based on a global survey of 921 senior professionals in the sector1, around a third of those questioned (31%) will prioritize job cuts to manage costs. Further, a higher share of Brazilian respondents believe the sector has taken a short-term approach to headcount (55% in Brazil versus 51% globally).
However, longer-term cost-management measures include improvements to energy efficiency - cited by 29% of Brazilian respondents, 20 percentage points higher than the global percentage, and the second-top cost-management measure.
Brazil also has a higher focus on standardization, with 80% of respondents expecting operators to push for standardization, compared to 61% globally. Sixty-four per cent say their organization will seek to achieve greater standardization of tools and processes during 2016, compared to 59% globally.
Alex Imperial, area manager, South America, DNV GL – Oil & Gas, says: “Brazil’s oil and gas industry has had a very turbulent year and has responded with short-term measures to control costs, such as increasing pressure on the supply chain and making tougher decisions on CAPEX. More job cuts can be expected in the year ahead to control costs.
"However, it's encouraging to see that these short-term measures are being balanced with a longer-term view of cost management: optimizing production efficiency and greater standardization of tools and processes are being cited as important ways to drive cost-efficiency. I’m particularly pleased to see that the region is forging ahead with collaborative industry projects and strengthening links with academia to maintain innovation in the long-term.”
Forty-four per cent of Brazilian respondents plan to increase collaboration with other industry players and 40% plan greater involvement in joint industry projects. More than a quarter (27%) of Brazilian respondents plan to increase partnering with academic institutions in order to maintain innovation, compared to 16% globally.
Elisabeth Tørstad, CEO of DNV GL - Oil & Gas, added: "Innovation and collaboration are even more important in this current price environment. It isn’t just about finding the breakthrough technologies – although that’s important too - it’s also about making things simpler and more efficient and ultimately helping the industry to safely cut costs. At DNV GL, we are continuing to invest 5% of our revenue in R&D as we see this as a key enabler for sustainable long-term competitiveness.”
Key findings from the report include:
- A greater number of Brazilian respondents (82%) are preparing for a sustained period of low oil prices, compared to 73% globally.
- Three-quarters of Brazilian respondents (76%) think the oil and gas industry will be successful in further reducing costs in 2016, as opposed to 65% globally.
- One in ten Brazilian respondents sees subsea/deepwater and monitoring/surveillance as key investment targets for R&D and innovation.
- Subsea and unconventional oil extraction technologies are expected by far the highest percentages of respondents (58% and 40% respectively) to be the most impactful new/emerging technologies for the industry in 2016.
1. A New Reality: the outlook for the oil and gas industry in 2016 is an industry benchmark study from DNV GL, the leading technical advisor to the industry. Now in its sixth year, the programme builds on the findings of five prior annual outlook reports, first launched in early 2011. During October and November 2015, we surveyed 921 senior professionals and executives across the global oil and gas industry. More than a third (35%) of respondents work for oil and gas operators, while 60% are employed by suppliers and service companies across the industry. The remaining respondents come from regulators and trade associations. The companies surveyed vary in size: 40% had annual revenue of USD 500m or less, while 14% had annual revenue in excess of USD 10bn. Respondents were drawn from publicly-listed companies and privately-held firms. They also represent a range of functions within the industry, from board-level executives to senior engineers.