THE stock market is on a roller-coaster ride, and so are oil prices. We have moved very quickly from July’s figure of $147 a barrel to about half that level. On September 29, oil fell by $10 in one day, but it is worthwhile to reflect that, back in 1995, the price of oil was $10 barrel.
While motorists, hauliers and those unfortunate enough to have oil-fired central heating will undoubtedly breathe a collective sigh of relief, the oil&gas industry will see things in a different light.
Everybody, Opec included, will now be taking stock and deciding how to cope with this new price level. Indeed, Opec was due to meet just before this issue of Energy hit the news stands.
Industry costs, which have been quoted as having risen by 30% in the past two to three years, are bound to come under renewed scrutiny as operators check the profitability of potential new projects.
The general manager of one of the oil majors recently told an Aberdeen audience that he saw his main role as securing investment from his board for North Sea projects at the expense of projects in other parts of the world, so he was bound to focus on costs and efficiency.
How well equipped are we to cope with the possibility of sustained lower oil prices?
This industry is fortunate to have in place some measures that date back to that $10 barrel era.
First Point Assessment (FPAL) was devised by a group of operators in 1995 and launched the next year, partly as a response to low oil prices, and today, this enduring initiative is used by 83 purchasers in the UK, The Netherlands and Ireland to enable suppliers and purchasers to save time and money by removing duplication of effort in the tendering process.
FPAL is therefore just as relevant to operators, contractors and the supply chain today as it was at its inception.
For further information, visit www.fpal.com