Description

The financial crisis and its impact on global economies have reduced the world’s hydrocarbon demand and in turn driven a significant reduction in oil and gas prices. Unfortunately for upstream producers, input costs have not fallen as quickly, especially for long-term, complex capital projects. As a result, oil and gas executives are pursuing cost reductions and reassessing capital programs. Because today’s upstream companies are so dependent on third-party material and service providers, with as much as 80 percent of total operating costs driven by third-party spend, any attempt to improve cash flow or contain costs must start with effective management of a company’s supply chain.