N. Sea ‘dipping into downturn’ warns ABIS Projects chief – despite £1m new business wins

 

Francis Kiernan,  ABIS Projects
Francis Kiernan, ABIS Projects

Aberdeen-based ABIS Projects has won a clutch of contracts worth around £1 million over the next 15 months – despite its chief warning that the N. Sea oil and gas industry is ‘dipping into a downturn’.

The oil and gas project services consultancy has secured frame agreements and call-off contracts with Talisman Sinopec and North Sea newcomer MOL Oil.

ABIS Projects provides multi-discipline resources covering business strategy, acquisitions, risk, projects and management systems across the supply chain.

It is presently working on the offshore Brent Bypass project for Shell – a major subsea pipeline project which will enable the decommissioning of the North Sea’s flagship Brent field – the eponymous oil which is used as a world benchmark for crude oil prices.

Francis Kiernan – who acquired an interest in ABIS Projects earlier this year – warned: “With the considerable drop in oil price, the focus in the North Sea once again turns to innovative ways of working which will deliver cost-efficiencies and greater value.

“A one size fits all approach is no longer sustainable. The ability to take a commodity, whether it be intellectual property, material, goods or supply chain risk and turn it into a value proposition is now required”.

The oil price has dropped by more than 25% in recent months and Kiernan said that this is exacerbated by high production costs. “Unit operating costs have risen 62% since 2011. The industry has lost sight of achieving optimal value for minimal cost. We need a much better alignment of cost and value,” he said.

Kiernan has been involved in the oil and gas industry for over 30 years and has worked with several companies in the UK and Scandinavia – including Nexus, Aker, Kvaerner and Press Offshore.

He added: “The cyclical economics of oil and gas are nothing new and we are already dipping into a downturn. And these challenges are going to be similar to the ones we faced in the early nineties when the UKCS contracting model changed dramatically, when there was fundamentally a balance sheet transfer from the oil company to the supplier.”

“While this is not good news for the big service companies, who need to pursue volume and service their overheads, it is good news to the smaller companies who can interpret and deliver what an oil company needs and meet that need through a boutique service with high-end intellectual property and value.

“Smaller, nimbler oil companies, like MOL, have clear terms of reference and want to engage with suppliers on how they can really work together to deliver value and not just add cost.

“Suppliers, like Hunting Energy Services, who are growing and maturing with a unique offering in the marketplace, are able to offer what their customers want which is a reduction in inventory and capital balance to allow their clients to shift their focus forward to exploration and development.”

ABIS Projects is also forecasting added-value niche opportunities for UK companies in the Norwegian North Sea as the sector’s production plateaus.

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