Business pulse: oil and gas
Core business focus and counterparty risk management
In an industry heavily reliant on joint ventures and multiple service providers, the desire to ensure an appropriate balancing of inherent risks and liabilities is an area sharpening in focus.
With the high numbers of joint ventures and third-party service providers, the issue of partner and contractor assessment and management has now moved up the agenda for all leading oil companies and investors.
Non-operated joint venture stakeholdings are a particular concern, as they tend to combine a limited ability to influence and control day-to-day operations with considerable exposure should things go wrong.
“Ensure that you really understand the implications for all the stakeholders of the divestment process to avoid surprises along the way.” Andy Brogan, EY, UK
Companies are thinking hard about their core business focus, and many are recognizing that they cannot be present in all countries in all activities. With opportunities outweighing the capital and skilled resources that most companies are able to invest, they have to be clear about where their organization’s core competencies lie and where they can achieve the greatest returns.
This is having a dramatic restructuring effect on the global energy landscape and on how companies manage their own risk and limit their exposure to partners’ risk.