posted on 2011-02-02, 11:19authored byMohammad 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.