Point of View

Francis Gugen, chairman of the Crine Network executive

The world market must want to buy from the UK as a matter of preference if we are to gain a larger share of it

The achievements of Crine have been internationally acclaimed for their impact on capital cost reductions in the oil and gas industry, and for prompting the spread of similar organisations in other industries. New ways of working have been defined, new efficiencies are being realised and a new confidence in the supply chain is emerging. Crine has been a banner for new thinking and the interchange of ideas between suppliers and purchasers.

I want to see the success of Crine being built upon, using its powerful network of enthusiasts to move the UK oil and gas industry forward to the next millennium. We must become competitive anywhere in the world by the year 2000. The reasons are clear. The North Sea is maturing, the global economy is materialising, competition is stiffening everywhere, but most importantly I believe we are not capitalising on our potential.

The UK supply industry provides only 1% of demand for goods and services to support oil and gas activity outside the UK. That compares with the 5% of world trade UK industry as a whole is able to win. Clearly it is not good enough.

In a rapidly changing environment, if we wish to retain a domestic supply capability in the long-term, we must increase our share of the world market. That will secure jobs, generate wealth and ensure a competitive supply base to extend the economic life of the UK Continental shelf.

Why not target 5% export sales like everyone else, with all that means for exports, jobs and prosperity?

New markets mean new opportunities and those markets will appear in the coming years in Latin America, the Far East, central Asia and Africa. Our focus must shift. We need to give value. The world market must want to buy from the UK as a matter of preference if we are to gain a larger share of it.

How can we do this? Costs are part of the answer and Crine has shown the way on that front. Now we have to create a winning culture from speed, competitiveness, relationships and people. These are the issues that were identified last year, at the 1996 Crine conference. The Crine network intends to build on them.

The energy displayed in the past three years can be harnessed to provide an intellectual forum where operators, contractors and suppliers together will find the edge to gain their rightful share of world business in the 21st century.

We must look at the life of field costs, not just developments; we must find better value from investment in wells; we must radically improve the working of the supply chain; we must also make sure that skills and training are back on the industry’s agenda. We need to sell ourselves to the world as leaders, using the UK base as a springboard.

The Crine process enables people from all sides of business relationships to come together as individuals seeking better ways to do things. This can then be taken back and absorbed by their organisations. This is a way of breaking down traditional adversities and suspicions within industry.

Taking this process forward is Crine Network, which has as its emphasis adding value, not just for capital projects but across the whole life of a field. New work groups are being formed and volunteers are being sought to tackle issues around the supply chain, well costs, training and education, and the use of existing Crine deliverables. We anticipate very strong support.

Organisationally, Crine Network has an eight-strong executive committee to set out direction and draw members from operators, contractors, suppliers, drilling and downstream companies, together with the Oil, Gas and Petrochemical Supplies Office of the Department of Trade and Industry. There is also a 20-strong advisory committee drawn from senior industry people to act as wise heads and keep Crine Network on track. It is a big force in engaging industry and business at large into the objectives.

Let me remind you of the vision: people working together to make the UK oil and gas industry competitive anywhere in the world by the year 2000. Together we can do it.

Francis Gugen is managing director of Amerada Hess and chairman of the Crine Network executive, which is launched this week. The network takes over the work of the Crine initiative, which has concentrated on cost reduction in the oil and gas industry for the past three years.