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Fig. 2 - Operating expen-
diture dynamics (total and
industry average) (source:
Reports Bain analisys)
Fig. 3 - Constraints for oil &
gas industrialization
(source: Bain analisys)
involving Shell and BG, as well as Halliburton and
Baker Hughes.
Furthermore, low oil prices implies less profitable
projects and higher discipline in capital budge-
ting (meaning that also profitable projects are li-
kely to be delayed in order to benefit from better
conditions from suppliers and service providers).
Consequently, as already happened in the past,
the oil price drop has dragged capital expenditu-
res down with no exceptions among IOC’s and
NOC’s (National Oil Company) (overall Capex
reduction estimated to be more than 47 billion
dollars).
Does it mean that the industry is “well equipped”
to cope with the challenges of the new era? Dif-
ferently from past price drops, this time the oil &
gas industry has woken up finding out that ope-
rating expenditures have achieved unsustainable
levels (figure 2). It is a direct effect of past in- However, industrialization in the oil & gas has been
vestment decisions, when high oil prices pushed
both IOC’s and NOC’s to focus exclusively on re-
ducing the time-to-market. Nowadays, the side
effects are clear and oil & gas companies are
struggling for solutions to ultimately avoid profits
to shrink.
48 Impiantistica Italiana - Luglio-Agosto 2015
Industrialization, coupled with innovation,
is paramount to reduce the operating
costs, as proved by some oil & gas
players that are already exploring different
operational approaches, exploiting cutting-
edge technologies or adapting their
business models
As Darwin stated “in a changing environment it’s
the fastest adapting species to survive, not the
strongest”, therefore this challenging context for oil
& gas players has also hidden opportunities. Other
industries, i.e. automotive, have already faced si-
milar challenges and overcome them by pursuing
“industrialization” with different degrees, from stan-
dardization to modularization.
a long-lasting buzzword, whose implementation
has been limited by several constraints such as
(figure 3):
• different technical specifications for similar
projects satisfying similar needs;