OTC Asia 2018: Energy experts shared their views on cost-cutting measures

By Mohani Niza

A panel of energy experts gathered at the Offshore Technology Conference (OTC) Asia 2008 in Kuala Lumpur, Malaysia recently to discuss strategies to regain market competitiveness, an important topic due to the market downturn in 2014 which saw oil prices take a sharp dive.

Among the cost-cutting ideas that were shared were increasing digital capabilities, ensuring greater transparency in the bidding process, improving market information flow and so forth.

Visal Leng, the Asia Pacific President of Baker Hughes, a GE company (BHGE), said several strategies are important in trying to regain market competitiveness: Firstly, use an integrated approach. This means combining upstream, mid-stream and downstream portfolios together.

Secondly, increase digital capabilities and harness the power of data. He mentioned his company as an example: digitalisation efforts have not only reduced his company’s rising material spending, but it has also empowered workers who are now more technologically-literate.  The company’s operations are also now running on maximum efficiency thanks to the increase of digitalisation.

However, Leng said the human element is also important. People’s mindsets should be open to new ways of doing things. Without it, there will be no innovations.

He also emphasised the need for collaboration.  BHGE is currently working with private Australian company Twinza Oil which is developing the first offshore field for Papua New Guinea, providing full-stream services from assessing reserves to drilling and building the gas processing plant.

“It is no longer about whether we can afford to cut cost, but we must make it work,” Leng said.

Samsudin Miskon, Vice President, Group Procurement, Petronas, echoed Leng’s views. “We must reform ourselves,” he said.

He pointed to several ways to cut cost, including: Offer multi-services instead of focusing only on one service; utilise economies of scale (EOS); improve market information flow to aid resource planning and growth strategies and lastly, increase transparency.

Economies of scale (EOS), for example, is now the general approach in energy firms such as Petronas, Samsudin said. More and more work involves integrated work scopes as well as longer contracting tenures. This is turn supports the sustainability of the industry.

He also said that transparency is key, which can be seen in the example of the e-bidding system by Petronas. The e-bidding system gives a “two-sided perspective”and motivates people to check their costs and compete healthily.

OTC Asia 2018 in Malaysia was a four-day event that brought experts from all over the world to discuss and facilitate knowledge-sharing in the energy industry.

(EOG)

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