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oil and gas industry

Key Procurement Challenges in the Oil and Gas Industry

Oil and Gas Industry Overview

The US oil and gas industry is booming due to significant exports and imports. New international offshore oil fields are being discovered and companies are creating new opportunities for revenue growth. But China’s gradual shift away from coal and increasing interests for liquified natural gas (LNG) is increasing the complexity and risk of the business operations. Additionally, ever-changing regulatory frameworks, continued negative public perceptions, the emergence of battery electric vehicles, geopolitics, and decarbonization policies are adding to the growing complexities and scrutiny that oil and gas companies are operating within. Therefore, it becomes a necessity for companies in the oil and gas industry to re-evaluate how they explore, produce, move crude, refine and distribute their products to satisfy increased demand. Here are major challenges facing the oil and gas industry for reference. 

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Major Challenges in the Oil and Gas Industry

Capital Cost

Due to high operational and maintenance costs, companies in the oil and gas industry have to look at costs on a Whole Life Cycle. Producing crude oil is an expensive process and requires companies to venture into marginal fields to stay competitive in the market. This is one of the major challenges faced by oil and gas companies as high capital investment for small field reservoirs are usually a risky option. Optimizing production systems should, therefore, be a priority of the oil and gas industry.

Supply Chain Visibility

Most companies in the oil and gas industry operate in a most physically challenging environment. They have complex operations and factors such as volatile oil and gas prices, complex regulatory norms, and third party suppliers, which further add to the complexity of the situation. Improving supply chain visibility to manage risks, control costs and optimize the performance of oil and gas companies becomes a task for companies in such a situation.

Wondering how fluctuating oil and gas prices can impact the growth of companies in the oil and gas industry?

Get in touch with our experts to gain comprehensive insights. 

Stringent Standards

The latest 2016 Paris Agreement negotiated under the United Nations Framework Convention on Climate Change to address the threat of keeping the global temp low is compelling companies to rethink extraction, production, and distribution methods to continue their operations. They need to provide guarantees and ensure transparency in the environmental management to meet increasingly stringent environmental standards.

Inability to meet stringent environmental standards can make it difficult for companies to sustain themselves in the oil and gas industry. Give SpendEdge a try by subscribing for a free demo to our platform and understand the market risks in detail.   

Talent shortage

Like any other industry, the competition for top talent is fierce. But with an aging and shrinking talent pool, employee onboarding, retention, and training have become a major issue in the oil and gas industry. Big companies need to invest in attracting the talent pool as emerging markets such as India and China are not only increasing global demand for oil and gas but also competing for talent.

To know more about the challenges facing the oil and gas industry, request more information here!

Top 4 Benefits of an Effective Portfolio Analysis for Oil and Gas Companies

Balancing production, investments, and returns in today’s lower-for-longer oil price environment are critical challenges for oil and gas companies. Top oil and gas companies are continuing to strive for the right balance of geographies and resource types. An important question that arises is what portfolio of resources can deliver the optimum results across a range of price scenarios?

In an era of higher shareholder expectations and uncertain oil prices, an effective business portfolio analysis is likely to be the priority for oil and gas companies. However, with the availability of innumerable narratives and tools in the marketplace, this is easier said than done. Therefore, oil and gas companies need to do a better business portfolio analysis. With the help of a comprehensive portfolio analysis tool, oil and gas companies can not only optimize their portfolio but also be in sync with the way markets evaluate portfolios in this period of uncertainty.

At SpendEdge, we understand the impact that an effective portfolio analysis can have on your business. And to help companies thrive in the competitive marketplace, our team of experts has highlighted four significant benefits of portfolio analysis that can help in maximizing ROI and deal with the competitive pressure.


Top Oil Spill Solutions Providers in the World

Oil spill solutions: Market overview

In recent years, there has been a boom in oil exploration and production activities. Consequently, the oil spill hazards related to such operations have increased the importance and growth of oil spill solutions providers around the world. Oil spill solutions are a set of techniques or solutions that are used to minimize environmental damage caused by oil spills. They also contribute to reducing the financial loss to stakeholders involved in spills. Oil spills commonly occur during the transfer of oil to ships and the transportation of oil. Another notable cause of oil spill could be due to leakage in pipelines that carry the oil from sea to land. The growing concern against environmental damage caused by oil spills and the consequent government mandates for ensuring accountability of oil and gas companies with respect to controlling oil spills are also playing a key role in driving demand for oil spill solutions.

oil spill

Top oil spill solutions providers



The company was founded in the year 1977 and is currently headquartered in the UAE. They provide a full range of oil spill services including incident evaluation & consultation, spill management, technical support, response logistics, planning & admin, deployment/operation of equipment & management of waste. The Polyeco Group has developed its expertise over the years in more than 2,100 operations across the globe. The company not only offers the most extensive range of environmental services available but also responds promptly to any size emergency oil or HNS incident as well as process and treat any volume of waste.request proposal


Lamor is a Finland based company that was established in the year 1982. The company’s oil spill solutions include a complete range of skimmers, oil booms, pumps, power packs, landing crafts, workboats, storage, and ancillary equipment. They have also invested significantly in R&D to discover new and effective oil clean-up solutions. Lamor has over the past 36 years developed its expertise in oils spill response and recovery, especially in the Arctic and offshore operations.     

NRC International

NRC International is the global leader in oil spill response, containment, and remediation. The company was established in the year 1992 and is currently headquartered in the US. In its rich history of 26 years, the company has contained and remediated over 1,000 oil spill incidents. Their emergency response network includes a workforce of over 1,250 personnel. NRC International operates from over 50 office locations in 13 countries worldwide, including in the United Kingdom, the Caspian and the Black Sea regions, the Mediterranean, the Middle East, and the Americas.Request Demo

Marine Pollution Control

Marine Pollution Control offers comprehensive environmental solutions that range from emergency response and clean-up to industrial maintenance and training. Founded in the year 1967 in Detroit, MPC has played important roles in many of modern history’s most serious pollution incidents.

Request a free sample of SpendEdge’s Oil Spill Solutions Procurement market intelligence report to know more about the market growth, pricing strategies, and supplier best practices in this market

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Global Oilfield Services: A Comprehensive Market Overview

What are oilfield services? 

Oilfield services (OFS) refer to all the services that support onshore as well as offshore oil and gas extraction and production processes. These services include identification of oil and gas reserves, drilling and formation evaluation, oil well construction, completion services, and oil and gas production. Oilfield services also include identification of oil and gas reserves, drilling and formation evaluation, oil well construction, completion services, and oil and gas production.

The good news for oilfield services companies is that the industry is expected to soar to greater heights and profitability in the years to come. In fact, the spend in this industry will rise at a rate of over 4%. (Source: Global Oilfield Services Market Intelligence Report). Here is a comprehensive oilfield services market overview that encapsulates various market factors and growth patterns that are likely to affect the oilfield services market in the next five years:Get Free Sample_SE

Oilfield services market overview 

Market insights

The gradual recovery of global oil and gas prices will be the major factor contributing to the growth of the oilfield services industry. In 2017, North America was the largest market for OFS. The demand for OFS from the shale industry was the major factor contributing to the demand from the region. Furthermore, with the rising demand for energy, especially from the APAC region, the consumption of oil and gas for power generation has increased. Factors such as growing population and industrial development are driving the need for energy is fueling the demand for oil and gas, which is a major raw material for power generation companies.

Procurement pain pointsSE banner Square

Procurement in the oilfield services market could often prove to be a difficult task. One of the major hindrance faced by oilfield services companies is that oil and gas E&P activities are subject to various regional and federal regulations. These regulations are affected by factors such as changing governmental policies. Buyers need to keep track of these changes to ensure suppliers’ compliance with the same. This is essential to ensure that suppliers do not face any regulatory actions that will affect the drilling schedule of buyers. Also, buyers can face regulatory actions in case of any non-compliance on the part of suppliers during operations at buyers’ facilities.

Pricing models

There are basically three types of pricing models in the oilfield services market:

  • Project-based model: In this model, buyers are charged a fixed amount for an entire project, and oilfield services companies provide all the services required for the project. The charges for these services do not vary during the service contract period. Buyers are charged additional fees for any additional services that are not part of the actual service agreement.
  • Cost-per-day model: In this model, buyers are charged based on the time during which oilfield services companies’ resources are utilized. This model is ideal for situations where consulting and advisory services are required as part of OFS. This model can also be used in case of drilling equipment rentals, where buyers need to rent equipment such as drilling rigs for a portion of the entire OFS operation.
  • Volume-based model: This model can be used in cases where procurement of products such as drilling fluids and OCTG is required. In this model, the prices are mutually agreed upon by the buyers and sellers for the duration of the contract period. The pricing is arrived based on pricing and demand forecasts. These prices include transportation and freight charges.

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Technological innovations

With the growing exploration of deep-water oil and gas reserves, increasing use of ROVs is observed. These devices enable drilling operators to access undersea locations that cannot be reached safely by divers and help perform inspection and repair of undersea structures and components. ROVs aid the development and maintenance of oil and gas resources in deep-water environments. They provide operators access to locations where divers cannot reach safely, helping them manage undersea operations such as inspection and repair of undersea components and structures at deep-water oil and gas sites.

SpendEdges’s latest report on the global oilfield services market provides in-depth insights on the procurement best practices, pricing insights, supply market insights, and top oilfield services companies.


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Sourcing and Procurement Challenges in the Oil and Gas Industry

The oil and gas industry is recognized as the engine for development in most economies. However, the companies in this industry are known to operate in dynamic and complex environments, where they constantly face challenges, especially in terms of supply and demand. But in the current market scenario, it is advisable for companies in this sector to evaluate the supply chain, sourcing and procurement techniques, and costs. Furthermore, as the industry faces the likelihood of a long-term low-price environment, procurement teams need to look beyond short-term tactics and take a more proactive and strategic stance within their organizations—for example, working further upstream in project design and collaborating with the engineering and design teams to reduce complexity before it is locked into long-term procurement cost. Although the technology is helping oil and gas companies to find and extract more oil, there is a need to seriously consider more effective sourcing and procurement systems that provide additional real value. But the catch here is that the process is not easy as it sounds. Here are some of theSE_Demo2 key sourcing and procurement challenges in the oil and gas industry:

Locally sourced supplies

In many cases, there is a requirement for the oil and gas sector to award various contracts to local companies (i.e. tool and dye operations, pipefitters etc.). That requirement can be the result of government regulations, or due to location (oil and gas companies often work in remote locations and will deal with service companies located near their operations). But these contracts can often prove to be lucrative and are “sought after by local companies.” That competition can result in circumstances where there is a higher risk of bribery, fraud, corruption, and other abuses.

Single-supplier sourcing and procurement

There is a general tendency for oil and gas companies to purse sourcing and procurement contracts with sole suppliers. Sometimes, companies offer specialties and expertise that make sole-supplier sourcing and procurement a reality. However, this could lead to undisclosed conflicts of interest and kickback schemes. Additionally, in case the processes have not been conducted properly, financial losses can be incurred that can compromise the quality of goods and services provided.

Third-party companies

Companies in the oil and gas sector need to be aware when third-party companies specializing in sourcing and procurement, engineering, and construction management work on their behalf. The sourcing and procurement activities carried out by these firms are susceptible to improper practices, and companies may find themselves liable for the acts of third parties. Oil and gas companies that operate in remote locations may end up working with third-party sourcing and procurement companies. And in those remote locations, the difficulty in monitoring these companies is higher because they are often not connected to corporate systems and electronic controls.  Geographic isolation could further cause challenges and limit internal audit monitoring, thus paving the way for fraud, bribery, and corruption.

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Supply Chain Analysis Helps a Drilling Rig Manufacturer to Identify Appropriate Supply Chain Strategies

Overview of the drilling rig manufacturing space

Over the past few years, the drilling rig market has started moving from a manufacturing-based business model to a more service-oriented business model. As a result, prominent players in the drilling rig market are redefining their business models to improve their production capabilities. However, drilling rig companies have started experiencing setbacks in terms of losses faced and low return on investments. Consequently, firms operating in this industry space have begun adopting new technologies to identify potential value opportunities. The growth prospects of the drilling rig manufacturing industry are spurred by the increasing mining and oil and gas extraction activities around the globe.

Although the drilling rig manufacturing industry is expected to display substantial growth in the coming years, a few factors are expected to influence the growth prospects of the industry. Some of the elements include:

  • Shortage of raw materials: With the exponential growth in mining and oil and gas activities over the last few years, there are supply shortages for the products among the end-users of this industry. As a result, firms are forced to maintain supply consistency in their products offered.
  • Innovations: Several drilling rig companies are in the early stage of growth and are heavily relying on obsolete techniques to meet the end-user requirements. Nevertheless, companies have started using innovations in their production capabilities due to the advances in technology. As a result, it becomes essential for players in this industry to efficiently meet the business requirements.

Such factors are compelling firms in the drilling rig manufacturing space to leverage the use of supply chain analysis solutions. request free proposalSupply chain analysis solutions help companies to capture the competitive advantage and increase overall profit. These solutions also help firms to map out specific activities within the generic value chain activities and look for ways to create efficiencies.

The Business Challenge and Journey

Client background: A UK-based manufacturer of the drilling rig equipment. The company recognized that there was no defined fallback position from which support could be maintained at appropriate levels at all time.

Client issue: The company was not able to provide an appropriate level of support to offshore facilities which could potentially jeopardize their objective to safely, efficiently and effectively deliver drilling rig products and services to customers.

The supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the oil and gas industry space to help the drilling rig manufacturer overcome their predicaments.

Client journey: The client recognized the value in engaging with our experts to carry out the business continuity planning and support the identification of appropriate strategies with their IT provider and support their offshore facilities.

Key questions answered in this supply chain analysis engagement

The Results

SpendEdge’s supply chain analysis engagement helped the drilling rig manufacturer to plan and put strategies in place that would help meet future needs of the organization.

To know more about our supply chain analysis

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