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Published: August 2, 2010

 
 

Big Oil’s Big Shift

Perhaps the biggest uncertainty in this new and challenging business environment is the ability of the major oil companies to change as conditions shift measurably. Most large oil companies — including both international oil majors and state-owned NOCs — have rigid management cultures and adversarial, penny-pinching relationships with suppliers and partners. Historically, they have tended to focus on short-term cost cutting without sufficient consideration for collaborative operations that could benefit themselves and their partners.

These practices will be far less feasible now, as oil-field operations become more complex and interdependent. Major oil companies will have to give their staff and suppliers more supervision, but also more trust and support; they will have to encourage everyone at every level to fearlessly point out potential safety and operational flaws; and they will need to fix more problems at early stages, even under immense pressure to deliver.

Many people in the oil industry have foreseen these types of changes, but they haven’t been forced to act. Now they will be. Those who figure out how to move beyond their past practices, troubled contractor relationships, and rigid management structures will lead the next generation in the oil sector — on land, in shallow waters, and in deep and remote locations. The time for these changes could come surprisingly soon.

Author ProfileS:

  • Viren Doshi is a senior partner at Booz & Company based in Paris. He has 30 years of industry experience, primarily in the oil and gas sectors. He is the leader of the firm’s global energy practice and the author of s+b articles on energy, infrastructure, and customer relationship management.
  • Hege Nordahl is a principal with Booz & Company based in London. She is a member of the firm’s global energy practice and focuses on the upstream oil and gas industry.
  • Adrian del Maestro is a principal with Booz & Company based in London. He leads the firm’s global energy research team.
 
 
 
 
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