According to Australia’s Industry Competitiveness Score, an evaluation completed by the National Energy Resources Australia (NERA) growth centre in association with Accenture, the successful implementation of value chain changes could unlock $5 billion in untapped value.
The findings from the report provided analysis which can equip the Australian oil and gas industry with strategies to effectively allocate and direct their resources to deliver maximum impact.
With the results delivered as part of a broader global ranking, the report conducted a comparative analysis of Australia’s performance across the four phases of the value chain: exploration, development and execution, production and abandonment.
According to the results, Australia ranks as the world’s most effective and efficient oil and gas explorer.
Work to do
Despite this, the country’s below par performance in the development and execution, and production phases ultimately affect the economics of delivering molecules to the market; undermining Australia’s overall competitiveness score.
While the high score in exploration may be presented as an advantage for Australia, the industry cannot afford to become complacent. The abundance of available energy resources will not last forever; new techniques will be required to find more complex resource deposits.
While there is significant room for improvement, the development and execution phase of the value chain is nearing a close in Australia.
The last decade has seen approximately $230 billion spent in developing some of the world’s largest and most technologically advanced LNG facilities.
With the balance of these coming online in the next two years, and with no major capital projects in the pipeline, the Australian oil and gas industry needs to shift the focus to production operations to maximise value and increase its overall industry competitiveness.
Ultimately, for the Australian oil and gas industry to ensure continued economic viability globally and to remain truly competitive; excellence must run through the entire value chain.
The opportunity and business rationale is clear for Australia: by investing in innovative solutions to reduce the risk, time, and cost of production operations, the oil and gas industry could maximise value across all phases of the value chain.
These solutions are key to improving competitiveness in the near term. To elevate Australia’s overall competitiveness score, the report identified four elements with the ability to affect the country’s oil and gas performance in a short period.
Priority should be given to driving collaboration between operators and service providers which could see Australia overcome many of its structural supply chain disadvantages.
Industry operators should work towards collaborating to share infrastructure and develop regional “˜hubs’ to better manage and streamline the supply chain process.
The industry should also consider investing in trialling 3D printing and other advanced manufacturing techniques to reduce the reliance on the supply chain in construction and maintenance areas.
Research and innovation
Engagement between industry operators, universities and research institutes can play a larger role in developing innovative solutions to solve the latest industry problems.
Industry executives should collaborate more effectively to unlock this underutilised resource.
One key area of strength for Australia is in the availability, maturity and completeness of geological and seismic data.
The Australian Government maintains an online repository of data that is free and publically accessible, facilitating information sharing and greater collaboration across the industry.
As the industry moves from development to operations; maintaining and improving Australia’s workforce competitiveness is paramount.
The oil and gas industry needs to invest in training and education to ensure the industry is prepared for the production phase.
As Australia has seen some of the world’s highest development costs in the recent construction boom, it’s essential organisational structures are improved to limit the level of overheads and maximise workforce efficiency.
Also if there are to be significant new greenfield projects, operators must engage the construction workforce and ensure they are skilled and competent to deliver projects on budget and on schedule.
The Australian oil and gas industry must prioritise regulatory reform, with the aim to increase government and industry engagement.
The report revealed 75 per cent of industry stakeholders believe Australia has an inflexible industrial relations framework.
From a broader governance perspective, there are approximately 150 statutes and more than 50 agencies regulating the oil and gas industry in Australia.
The industry should collaborate with regulatory bodies and the government to constructively review regulation and remove extraneous “˜red tape’ measures, lessening costs and time burdens.
Additionally, there is a need for clear directives on environmental regulation, which is a significant deterrent to investment in Australia.
Realising our potential
While the Australian oil and gas industry performed relatively well in the competitiveness score against its global peers, it’s clear there are still improvements to be made.
To increase competitiveness, the industry needs to look at the oil and gas value chain in its entirety and strategically consider what it chooses to invest in to maximise value over the next two to three decades.
All stakeholders, regardless of whether they are a large multinational industry operator, government body, or local supplier, have a role to fulfil.
Making tangible improvements across these four key areas could position Australia as one of the most competitive oil and gas producers in the world, and ultimately bring about significant value to the nation.