Statoil CEO: Our Industry has Bad Memory
— Published in Oil Industry News on Thursday, 23 April 2015
Statoil CEO EldarSætre has called for more standardization across the oil and gas industry, saying that is the key to lowering costs in the tough market of low oil prices.
Sætre, appointed CEO of Norway’s biggest oil company after Helge Lund left for BG Group, said: “Some say that the secret to happiness is nothing more than good health and a bad memory. I guess there’s some truth in that also for us in the oil industry. Having got used to a 100 dollar world, last year’s turning point hit us hard, and with surprise, once again.”
During his keynote speech at the IHS CERAweek conference in Houston this week, he noted that with every downturn the oil industry turns to the same solutions, such as slashing capex and exploration, cutting costs and reducing headcount, while also tightening dividends and buy backs.
“But this time – as an industry – we must do more than just hit the brakes,” he said.
Offering a solution, he went on: “Standardization, simplification and industrialization. Not yet words that are immediately associated with our industry. But the potential is large, in many areas.“
He said that standardization of certain processes in the industry could be a game changer, noting the fact that the costs have soared over the last decade as every operator has their own tailor made solution for every project out there, instead of focusing on cooperation, simplification and common solutions for common problems.
He said that due to these, tailor made solutions across the industry, over the last ten years, the cost of subsea developments have increased by 250%.
“Complexity is something we have built over decades. Resources, regulations and specifications have all become more complex. And we have countered complexity with even more complexity. “
“Getting to simplicity is harder. It means getting to the core of what’s needed. Cutting costs in the simple manner is rather easy. Cutting the right costs is much more difficult,“Sætre said.