A well-known market intelligence company, Infiniti Research, has announced the completion of its latest article on spearheading transformations in the oil and gas supply chain. This article elaborates on some key strategies that experts at Infiniti envision will change the current state of the oil and gas companies and help them adapt to the changing environment.
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Enabling transformation in the oil and gas supply chain. (Graphic: Business Wire)
The growth curve of oil and gas supply chain companies has shown a 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. To cope with the changing market conditions, companies in the oil and gas industry have cut down costs and, in some cases, made changes to their business models in order to thrive.
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The oil and gas industry has grown exponentially over the years owing to soaring crude prices in both domestic and international markets. However, the current oil and gas industry landscape and the recurring 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 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.
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New revenue models
New revenue models have emerged in the oil and gas sector including 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 facilitating 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.
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About Infiniti Research
Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit:https://www.infinitiresearch.com/about-us
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