The one thing the industry must not do in a downturn is throw on the brakes, according to Statoil’s Lars Christian Bacher.
The executive vice president of Statoil said despite mounting financial and exploration challenges the industry must continue to stride forward.
Speaking at Offshore Europe, Bacher said: “We know that as an industry we must do more than put on the brakes. We must make fundamental changes.
“As Benjamin Franklin once said when you are finished changing you are finished.
“We are far from being finished as an industry.”
However, he stressed the sector must learn how to do business at $50 oil.
“This is the new normal,” he said.
The fundamental changes the industry must make include addressing a bloated cost base and becoming part of the global carbon solution, according to the 20-year industry veteran.
Capex has soared more than 300% while production steadied over the past decade, according to Bacher.
“At Statoil we started addressing the costs a year and a half ago – that was before the oil price decline.
“We looked into where all this money was going and realised it was not a sustainable way to do business in this industry.
“We have since increased our target of saving to $1.7billion by the end of next year.”
Bacher added sector as whole, from operators to service companies, must “take in the seriousness of the situation”.
That includes learning to make and enforce long-term savings and better business practices.
He referenced Statoil’s refusal to include one-off contract savings in its $1.7billion target. Those are not “fundmental changes” according to Bacher.
He added the industry had better handle on business “in low oil price rather than low high oil price”.
The industry leader also reinforced the Norwegian operator’s commitment to the Aberdeen sector.
He confirmed the firm has since awarded $1billion worth of contracts to the Aberdeen sector for its flagship Mariner project.
“We realise that we are a late entrant into the Aberdeen market but we aim to be here for decades to come,” he said.
Statoil has drilled two new exploration wells in the UKCS since the start of the year – exploration Bacher said will “result in opportunities to grow our presence in the area”.
But it must all be done at the right price point, Bacher stressed.
“If we want this to be an industry for the future and for generations to come we need to crack this code,” he added.
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