Loughborough University
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Adopting appropriate procurement strategies in the oil and gas industry

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posted on 2011-02-02, 11:19 authored by Mohammad F. Mohammad
Global business trends have led the oil and gas industry to seek better solutions to overcome the emerging challenges and critical issues, such as the need for procurement strategies based on new values and contextual factors including multi cultural complexity. One way to overcome some of these critical issues is perhaps to adopt new innovative approaches to suit different locations, countries or regions while trying to incorporate the differences in business philosophy, culture or values within the oil and gas organisation themselves into these approaches. New innovative approaches to procurement strategies are also required to meet the contextual needs found in different locations and countries around the world. These approaches also need to accommodate specific project needs and different values either in the business philosophy or culture within the oil and gas organization themselves or in the local practices. Oil and gas exploration and production is a highly risky business in a very complicated industry. It links government, owners of the natural resources with operators, investors of private capital, technology and equipment necessary for resource development, in a single industry where the stakes and risks, as well as the possible profit margins, can be very high. The aim of this research study is to improve the understanding of procurement strategies of players and stakeholders (hereafter referred to as "decision makers") in an industry that has gone beyond regions and boundaries. The objectives of the research study included: to explore current procurement practices and trends; to identify the different values adopted by players; and highlight the possible impact of multi cultural complexity on global procurement process and strategies. This research study included an in-depth analysis on these issues using data from literatures and collective responses from the decision makers within the industry. Among the key conclusions and recommendations that can be derived from the research study includes the need to improve the current procurement process in the industry to achieve a more conducive, sustainable and fair working environment between clients and contractors. In the procurement process, decision makers must assess and link their company's type, resources, stakeholders and capabilities before any decision on procurement can be made. Conventional procurement methods, although very much in used by the industry, must be looked upon seriously and studied on its needs and relevance to avoid serious problems or failures in this complicated and complex industry. Finally, a comprehensive procurement strategy guideline on selection processes to be used by decision makers in the industry was developed and produced comprising a set of phases and critical steps that needs to be followed and performed during the selection process. Major issues and associated elements identified in the research study were also incorporated into the guideline on the selection process. This will hopefully assist decision makers to make better analysis and assessment on the appropriate procurement strategy to be adopted in future oil and gas projects throughout the World.



  • Architecture, Building and Civil Engineering


© Mohammad Fadhil Mohammad

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A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.

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  • en

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