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oil and gas industry

Market Intelligence Solution Helped an Oil Industry Client to Achieve 6X Return on Invested Capital

One of the United States largest oil industry client wanted to shift from a geocentric model to a global model to improve performance. However, this presented various logistics and operational challenges. Infiniti’s market intelligence solution helped the oil sector client to shift one of its major divisions from a geocentric model to a globally centralized functional model to improve performance.

Business Challenges Faced

A global oil company wanted to shift one of its major divisions from a geocentric model to a globally centralized functional model to improve performance. However, the decentralized organizational structure made it difficult for the client to achieve these objectives. The oil industry client, therefore, wanted to improve capital efficiency through increased standardization in the development process, better allocate scarce capabilities, and address the shortage of skilled workforce. Besides, the client wanted to improve best practice sharing, deepen operational expertise, and raise safety standards across the organization. They chose to partner with Infiniti Research to leverage their expertise in offering market intelligence solution.

The COVID-19 outbreak has caused a significant threat to the global oil industry. Our business continuity support solutions can help you to combat the business impact of COVID-19. RFP here.

Our Integrated Approach

As a part of the market intelligence solution, the experts at Infiniti Research helped the oil industry client in developing a central organization template, creating and iterating business unit organization design, and mapping existing roles to a new organization. Our experts also helped the oil industry client to plan towards the implementation of a new organization, which involved project management of change management program and risk management and assurance.

In addition to this, experts at Infiniti Research helped the oil industry client to establish a broad-base frontline mobilization, build a robust operational infrastructure with processes and IT that support loyalty initiatives, and create effective communication strategies for the organization.

Business Outcome

With the help of Infiniti’s market intelligence experts, the new organization was implemented in all units ahead of the deadline with minimal disruption to the existing business. This helped the oil industry client to define process maps and decision rights for selected key processes and document responsibilities for key roles. The client was also able to establish a broad-base frontline mobilization, build a robust operational infrastructure with processes and IT that support loyalty initiatives, creating effective communication strategies for the organization

Within one year of leveraging our market intelligence solution, the oil industry client was able to reposition themselves as an innovative competitor, offering more flexible pricing, products and services. Also, the client was able to achieve a 6X return on invested capital.

Contact us to know the potential impact of COVID-19 on your business and for action plans to respond to the coronavirus crisis.

Chinese oil and gas industry

Market Potential Analysis | Devising a Business Continuity Plan for a Chinese Oil and Gas Industry Client to Succeed in the Post-COVID-19 World

Chinese Oil and Gas Industry Overview

Although the Chinese oil and gas industry has been witnessing a positive growth over the past few years, the COVID-19 pandemic has shattered oil demand and caused excessive revenue changes in the sector. Besides low demand and lower prices, social impacts, structural issues, workforce management hurdles, and supply chain complexities are increasing challenges for companies operating in the Chinese oil and gas industry. This current landscape in the oil and gas sector is pressurizing players in the industry to undertake practical steps for responding to the coronavirus crisis. To maintain a superior level of operational excellence in the post-COVID-19 era, oil and gas companies must also consider some critical factors including crisis management, reliability, productivity, supply chain management, and cost optimization.

The COVID-19 outbreak has caused a significant threat to global oil and gas industry. Our business continuity support solutions can help you to combat the business impact of COVID-19. RFP here.

Business Challenge

A leading oil and gas industry client based out of China, witnessed plummeting oil prices and production declines owing to the coronavirus outbreak. Also, the Chinese oil and gas industry client encountered weak lines in its supply chain as their vendors and suppliers faced operational and financial challenges due to the fast-spreading coronavirus pandemic. Besides, faced with challenges such as geographically fragmented supplier base, potential cash flow constraints from foreign operations, and workforce management hurdles, the company wanted to gain complete visibility into spend and re-evaluate their operations. They chose to partner with Infiniti Research to leverage their expertise in offering market potential analysis.

Other key objectives of the Chinese oil and gas industry client were:

  • Implementation of crisis management and response plan to emerge successful in the post-pandemic world
  • Optimization of spend analysis and categorization
  • Reviewing of capital and corporate cost budgets
  • Divesting under-performing assets
  • Setting up risk mitigation programs around employees
  • Assessing links in supply chain and identifying potential weaknesses
  • Adjusting cash flow management
  • Determining a market-determined pricing system
  • Identifying alternative vendors and suppliers to meet the immediate demand in the post-COVID-19 era

Contact us to know the potential impact of COVID-19 on your business and for action plans to respond to the coronavirus crisis.

Our Integrated Approach

Infiniti’s market potential analysis involved a five-phased approach:

Crisis management and response: The experts at Infiniti Research carried out a review of the Chinese oil and gas industry client’s capital and corporate cost budgets to identify marginal investments. Also, the experts assessed how profitability and cash flow generation can support the ongoing operations of the client in a low oil-price climate.

Workforce management: The experts gathered necessary data on the Chinese oil and gas industry client’s employees and set up risk mitigation programs around employees.

Supply chain and operation: The experts closely analyzed the client’s supply chain complexities and identified Tier 1 and Tier 2 suppliers. Besides, the experts identified alternative suppliers in non-impacted regions of the world to help the client meet their immediate requirements post-COVID-19 crisis.

Financial reporting: In this phase of the engagement, the experts helped the Chinese oil and gas industry client to modify their risk factor disclosures and reassess the financial balance sheets.

Cash flow management: The experts reassessed the client’s cash flow statement forecasts and analyzed the best and worst-case scenarios over the short and long term.

Business Outcome

With Infiniti’s market potential analysis, the Chinese oil and gas industry client was able to improve spend data quality, visibility, and accuracy. Also, the client was able to gain complete visibility into procurement and streamlined processes. Besides, the client was able to take immediate and contingent safety measures for their employees.

By analyzing the potential market demand post-COVID-19 crisis, the experts recommended the Chinese oil and gas industry client to reduce their capacity and cost structure through staff reductions and related measures. To reduce operating costs and run the operations smoothly, the experts recommended the client to consider outsourcing portions of their corporate functions, including moving IT to the cloud and shifting internal non-core operating functions to contractors. By doing so, the client was able to lower operating costs and eliminate maintenance capital. In addition to this, the experts helped the client to identify alternative suppliers to help them at times of immediate requirements.

The Chinese oil and gas industry client was also able to safeguard the supply chain operations by understanding supply chain risks, manage cash outflows, develop a range of scenarios to predict future outcomes, and identify local suppliers to support them at times of immediate requirements. Also, the Chinese oil and gas industry client was able to examine the company’s financial spend and identify new ways to achieve a reduction in cash outflow. Furthermore, by closely reviewing in year inventory position and assessing supply chain complexities, they were able to adjust inventory for the post-COVID-19 period.

As China’s oil and gas industry is recovering from the COVID-19 crisis, it’s high time for oil and gas companies to outline action plans to succeed in the long-run. We can help you achieve this strategic objective. Learn more about our business continuity support solution.

oil and gas companies

Major Roadblocks to Achieving Operational Excellence in the Oil and Gas Industry

The current landscape in the oil and gas sector is pressurizing players in the industry to re-evaluate their operations. Furthermore, oil and gas companies are also driven by cost-containment and sustainability challenges.

To deliver and maintain a superior level of operational excellence, it is imperative for oil and gas companies to consider some critical factors including safety, reliability, productivity, and cost optimization. These factors play a crucial role in determining the economic viability of a drilling program in a given set of market conditions. At the same time, the growing level of complexity and scrutiny in the sector is increasingly creating roadblocks for companies in the sector to extract maximum benefits from the available opportunities for revenue growth. Oil and gas companies are also faced with the challenge of altering and realign their operations with the rapidly changing market variables. These factors coupled with a cut-throat market competition are driving a renewed focus on achieving operational excellence among oil and gas operators. In this article, experts at Infiniti Research have listed out some of the key operational excellence challenges facing oil and gas companies and also defines how to avoid them.

Designing and executing an effective strategy requires oil and gas companies to have a clear understanding of the rapid market changes. Want more insights on how we have helped some of our top clients in the oil and gas industry achieve this?

oil and gas companies

Gaining visibility into complex operations

Some of the top oil and gas challenges include challenging work terrains, price volatility, regulatory and compliance requirements, and varying educational skills of employees. For effective cost containment and to ensure better employee performance, it is important for oil and gas companies to attain greater visibility into their operations. Adopting integrated operations can be useful in enhancing reservoir recoverability, optimization of production, and reducing safety risks in the oil and gas industry.

Dependency on third party suppliers

Even some of the biggest oil and companies rely on third party suppliers for specialist equipment and expertise relating to oil and gas supply chain. These oilfield services platforms perform critical business functions for companies in the oil and gas sector. This means that any inefficiency caused by one company can have a devastating effect. Additionally, inconsistency in collaboration and communication can slow down projects, thereby giving rise to increased inefficiency. By leveraging solutions such as cloud-based collaboration platforms, oil and gas companies can share comprehensive planning and forecasting information and also standardize their inventory management.

Have queries relating to your business challenges? Get in touch with an expert for detailed insights.

Employee onboarding, retention, and training

This is one of the most critical issues facing companies in the oil and gas industry. The market for good talent has become highly competitive, especially due to the growth and demand for talent in oil and gas from emerging economies like India and China. To make it worse, the growing rate of retirement of the industry’s highly experienced employees are adding further pressure. Therefore, it is essential for oil and gas companies to look for ways to retain their skilled labor through robust learning and development opportunities.

Learn more about Infiniti’s solutions for oil and gas companies

Spearheading Transformation in the Oil and Gas Supply Chain: A Guide for the C-Suite

oil and gasThe growth of oil and gas supply chain companies has been showing a trend of steady decline over the past couple of years. As the supply chain spending by operators has been cut back due to crumbling crude prices, the Oil Field Services and Equipment companies (OFSE) have been losing business. The companies in the oil and gas industry have cut down costs and, in some cases, made changes to their business models to cope up. Here are some strategies that experts at Infiniti envision will change the current state of the oil and gas industry companies and adapt to the changing environment.

Commodity-price fundamentals are challenging in the short term, requiring executive teams to constantly reevaluate mid- to long-term expectations. As a result, companies in the oil and gas industry are confronting significant strategic challenges and complex decisions. Request a free proposal to know more about our solutions and how we can help oil and gas companies formulate sustainable business strategies.

Cost-cutting

The oil and gas industry is one such sector that has grown exponentially due to soaring prices over the years. However, the current oil and gas industry landscape and the need to cut down prices have come as a big blow for oil and gas companies. The industry has been faced with multiple years of cost inflation, this rising expenditure per barrel, and high break-even levels. Operators are now rediscovering the spirit of efficiency to overcome these challenging times. For instance, independent operators in the US onshore raised production per well while lowering cost per barrel by using improved horizontal drilling techniques, and longer wells with more frac stages, along with super fracking, where drillers pump a lot more sand into their wells. Tactical initiatives such as project postponements, expenditure cuts, and staff reductions were given prime importance, and OFSE firms responded by cutting back on their own service and manufacturing footprint to cope with less activity, lowering their costs for solutions delivered.

Collaboration

Collaboration could prove to be an effective strategy to lower costs and simplify contractor management in the oil and gas industry. Many services and equipment purchases currently are outsourced to several different providers. This often results in complexity and a fragmented supplier base. Multiple OFSE companies are now bringing these services in-house, with integrated offerings reducing coordination costs. This can result in significant cost savings. While some oil and gas companies are developing integrated offers in-house, many also are partnering or merging with others to provide a wider range of services.

oil and gas

In the past 15 years, we have undertaken 500+ projects across all major regions and industry sectors, helping clients plan and execute the strategies required to sustain and grow. Get in touch with our experts for more insights on our market intelligence solutions and how it can help your organization.

New revenue models

New revenue models have emerged in the oil and gas sector. This includes performance-based contracts that combine equipment and services and participation in project financing. This allows oil and gas companies to give operators more flexibility by reducing their cost base and need for investment during challenging times. Although this results in more capital expenses for OFSE providers, it also can create a more stable income flow.

Investment in new technologies

Investments in modern technologies are helping oil and gas companies to capture new growth and attain sustainability. Today’s low oil prices have created a need for efficiency, which highlights new technologies that can drive efficiencies albeit at a limited investment cost. Many OFSEs now are redesigning equipment using modular designs to drive out inefficiencies and attain maximum cost reduction.

Our solutions can help oil and gas companies to manage uncertainty and improve performance through analysis, insights, and benchmarking. Learn more about our solutions.

Chinese oil and gas industry

A CIO’s Guide to Oil and Gas Industry Trends

Over the past decade, the oil and gas industry has experienced numerous shifts and fluctuations, along with extreme volatility in oil and gas prices. A combination of erratic commodity price fluctuations, ambiguity about the future of fossil fuels, and increasingly contentious trade negotiations around the world are upending traditional supply and demand fundamentals in the oil and gas industry. In this scenario, executives must find new ways to maintain competitiveness and growth. In this blog, experts at Infiniti have identified some of the key trends that oil and gas companies must watch out for. CIOs who understand these oil and gas industry trends can take advantage of them to enable breakout performance that will differentiate them and their organizations in the years ahead.

CIOs must keep a constant watch on the oil and gas industry trends in order to innovate their processes before their counterparts in the market. Request a free proposal to know how Infiniti can help CIOs become agile innovators.

Oil and gas industry trends 2019

oil and gas industry trendsTransparency and automation

Operational transparency is only now beginning to become an industry reality and one of the widely followed oil and gas industry trends. It provides organizations in the oil and gas industry with more visibility into operational performance and also gives them the ability for effective and rapid decision-making. Furthermore, field work is expected to become less hazardous and less expensive. CIOs can expect to see large-scale assets such as offshore oil rigs operate autonomously without any human intervention.

Oil and gas organizations are aggressively moving to programs that redesign the future of work. Get in touch with our experts to know more about the transformations in the sector.

Leveraging digital resources

It is vital for CIOs to strike a balance between leveraging digital resources for better business resilience and supporting on-demand resources and scalable technologies in an effort to make cost structures of the business more scalable. CIOs of companies in the oil and gas industry who want to enhance their business resilience in volatile markets must keep abreast with the newest oil and gas industry trends and identify ways to keep their operating models more responsive.

CIOs as change agents

Bringing digital transformation to full scale in the oil and gas industry could prove to be highly challenging for CIOs’. Some of the key barriers faced include fragmented data management, lack of relevant team skills, and weak coordination across silos. Although embracing change is paramount for success in the long run, CIOs in most oil and gas companies are yet to realize the importance of embracing change. Partnering with HR heads is a great way for CIOs to work on their change leadership competencies.

Product-centric delivery

CIOs of some of the top oil and gas companies in the world have recognized that potential benefits that product-centric approaches can provide in modernizing IT delivery. Its’ scope is rising although the current implementation rate is low. Experts at Infiniti also believe that, at the current rate, by 2020 majority of the companies in the sector would embrace oil and gas industry trends such as product-centric delivery.

Learn more about oil and gas industry trends, opportunities, and challenges.

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