Vital Support

28 February 2007 (Last Updated February 28th, 2007 18:30)

Major oil and gas operations would scarcely get off the ground without a strong network of logistics professionals. Matt Willey investigates the invisible hand working behind the scenes.

Vital Support

As the world's oil and gas producers tackle the increasingly complex task of
searching for, harvesting and selling the world's prime energy resources, they
are standing centre stage in a major geopolitical spectacle.

With an audience of consumers looking on from afar, a diverse cast of state
enterprises, multinational corporations and smaller independents plays out its
own version of 'all's well that comes out of the well'.

All the while courting governments, pumping petrodollars into the global
economy and keeping the wheels of industry turning, the major players vie for
attention as they ply their trade in full view of the public.

What most of the audience fail to see, however, is the great buzz of
activity going on backstage. While the operators hog the limelight, a vast
array of oilfield services, engineering and construction companies scurry
around in the wings, putting the scenery in place, rehearsing the extras and
making the props.

And while it is the big names that get the applause at the end of the
performance, their relatively anonymous colleagues working behind the scenes
are no less valuable in making the show a success.

HARD WORK IN A HARSH ENVIRONMENT

What sets the oil and gas industry apart from a standard 'all the world's a
stage' analogy, however, is the fact that the stage in question is out in the
middle of the North Sea, the Persian Gulf, the Kazakh Steppe or the Siberian
Taiga.

For example, long before BP, Exxon, Sakhalin Energy & Co moved in,
Sakhalin Island (Karafuto) was best known as a penal colony in Tsarist Russia,
and subsequently one of Stalin's gulags.

The vast majority of oil and gas activity takes place in some of the most
remote locations on the earth – which brings us to another set of 'bit
players': the logistics providers.

One of the biggest challenges in any remote operating arena is equipment and
personnel logistics. As such, the various freight forwarders, express carriers
and logistics companies servicing the thousands of oil and gas projects around
the world have a critical role to play.

"Logistics companies play a crucial role in the world's more remote oilfields."

The success of these logistics providers in supporting the operations of
producers and service companies can be measured by their anonymity. The less
visible they are in shifting equipment and building materials, rigs and spare
parts, the smoother the running of the operation, and the greater the profit to
the client.

Logistics costs represent a significant percentage of oil and gas companies'
budgets, precisely because of the remoteness of the locations and the
time-critical nature of the activity.

In a business where an oil rig can cost anything upwards of $100,000 a day
to rent, the replacement of a single spare part holding up production has added
urgency. If your rig is on the Kashagan oilfield in Kazakhstan's Caspian Sea
and the spare part repair facility in Aberdeen, an efficient logistics partner
is an absolute necessity. Only with this level of support behind the scenes
will the final performance be a success.