Amid expanded ground operations in Gaza and with no ceasefire in sight, per-barrel oil prices seem to be creeping ominously toward the $100 mark. There are growing fears that central banks’ efforts to rein in higher inflation are going to prove tougher in the days ahead. Any widening of the Middle East conflict is sure to squeeze fuel supply lines that are already under strain because of the Ukraine war. Pricing and supply security are not the only issues oil and gas procurement must confront in the days ahead. For years, the industry has been accused of “climate crime” since oil and gas participants directly or indirectly account for more than two-fifths of global greenhouse emissions!
So, there are vociferous calls from stakeholders for the oil and gas industry to rededicate itself to the cause of sustainability and minimize the carbon footprint from prevailing operations. Moreover, young people are increasingly buoyant on renewable fuels as a career path, and oil and gas procurement faces the uphill task of making themselves more attractive for millennial workforces by way of top-of-the market compensations, flexible work policies, and more opportunities for learning and faster career advancement.
ESG focus is a top priority for oil and gas procurement
The oil and gas industry empties tons of toxic pollutants, including various organic compounds and greenhouse gases, such as methane. The last- mentioned chemical compound is the main culprit behind up to a third of all global warming, and this has been the case since pre-industrial times. Waste and byproducts from oil and gas exploration degrade ambient air, water, and soil, besides causing negative health outcomes in humans and animals. Among social impacts, land use changes, an inevitability in oil and gas exploration, are resulting in the displacement of local communities. The worst hit are the defenseless populations in low-income economies. Time and again, studies have flagged the role of large transnational and state-owned oil, gas, and other extractive enterprises in perpetuating corrupt practices in governance in postcolonial nations.
Nothing can be worse than higher fuel prices
As the conflict in Gaza rages, oil prices are up 3%, with per barrel Brent futures hovering around $90.48 and West Texas Intermediate (WTI) just shy of $86 a barrel. The $90 mark, a magic number in oil and gas trading, has been dented, and that’s when the world starts to confront the challenge of inflation in the real sense. A third of the world’s oil supplies comes from the Middle East, and reports say the American leadership is moving swiftly to avoid any expansion of the theater of war, which might squeeze oil supplies via the Hormuz Strait. This narrow waterway is a nautical chokepoint for almost a fifth of global oil supplies and more than a third of liquefied natural gas (LNG) shipments. So, that’s a wake-up call for oil and gas procurement organizations.
Talent retention is a big issue
The sector is challenged with skills shortages, with many millennials, boasting between 5 and 10 years of service, mulling exit options. The way things are not enough freshers are signing up for jobs in an industry that is struggling to overcome its “image problem.” Just for this reason, a growing number of technology natives want to give the sector a miss. Billed as a game-changer with bottomless potential, renewables look rosier for the millennial generation from a career standpoint. Lack of flexible career progressions and avenues for training and development, not to speak of attractive pay packages, are also hindering talent retention efforts in the oil and gas industry. Truth be told, oil and gas procurement organizations have a big job on hand.
Unlock new opportunities for your oil and gas procurement by requesting a free proposal from SpendEdge. Our experts will help you enhance supply chain resilience and uncover cost-saving strategies tailored to your needs...
How can SpendEdge can help
SpendEdge Solutions
- Unlock your supply lines
- Ensure procurement risks show up on your radar
- Open new vistas for cost savings
Unlock your supply lines
Supply-side experts at SpendEdge work closely with clients, including in oil and gas procurement, to uncover potential disruptions and vulnerabilities in the supply network before they start to adversely affect production and delivery. Our supply chain track ‘n’ trace services are designed to provide clients with clear visibility of the supply network at a granular level, so they can control costs at a per-unit level while mitigating risks.
Ensure procurement risks show up on your radar
Our incisive procurement analysis, including in oil and gas procurement, is enabling client teams to develop the right backup plans to insulate the sourcing organization from various business risks. Our experts evaluate current and potential risks at a per-supplier level, so clients can take timely action to plug supply-side vulnerabilities and always ensure a smooth flow of goods and services. Our risk management tools put timely alerts at the fingertips of oil and gas procurement teams to help them improve the bounce-back capabilities of their supply networks.
Open new vistas for cost savings
Clients across industries are leveraging our cost analysis framework to uncover new cost-saving opportunities in oil and gas procurement that they thought never existed. For instance, businesses have succeeded in getting the most value from driller and refinery equipment purchases thanks to an improved understanding of supplier pricing and vendor engagement models.
Navigate the complexities of oil and gas procurement with confidence. Connect with SpendEdge to enhance supply chain resilience and uncover untapped cost-saving opportunities today!
