Accenture seeks cost reduction by oil firms

28 May 2016, Abuja – Professional services company, Accenture Group Nigeria, says although upstream oil and gas operators have responded to the dwindling crude prices through various cost-cutting measures, more still needs to be done in that regard.

crude oil prices1The Senior Manager, Resources Group, Accenture Nigeria, Oyeleke Banmeke, in an analysis/presentation titled, ‘Crude Oil Price Decline: A Challenge or Opportunity’, said  falling oil prices had led to production slow-downs, staff layoffs and delay or outright shelving of major investment projects.

“Conscious efforts need to be made to support cost reduction and improve/create a healthy cash flow position with a view to ultimately improving margins. It is noteworthy to mention that Nigeria has one of the highest oil production costs among other producing nations,” Banmeke said.

He said operators would have to carefully reassess both planned and ongoing capital projects, eliminate non-value adding activities and generally revalidate the business case for the projects in light of current realities.

Operators, he added, would also need to prioritise turnaround and preventative maintenance to increase equipment uptime and decrease costs of equipment repairs, service providers and contract labour.

He stressed, “Across the industry, contractual agreements will be renegotiated (with core and non-core suppliers) with a view to driving costs down. The need to outsource non-core or select back-office functions will reverberate once again across the industry.”

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