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North America and Brazil hold growth opportunities for 2014

Hydrocarbon Engineering,

According to a new research report from DNV GL, senior oil and gas professionals expect the USA and Brazil to be the two most favourable investment destinations in 2014. 92% of regional respondents are highly or somewhat confidential bout the overall prospects for their business, the highest figure recorded amongst worldwide respondents.

Challenging climates

Although the overall outlook for the Americas is optimistic, from the report survey results, challenges still lie ahead. An acute lack of skilled professionals is cited as the top barrier to business growth in North America 2014 and nearly half of the respondents believe challenges surrounding compliance with new regulation in the US will affect the progress of their business.

The report has also identified signs of greater discipline over capex across the whole oil and gas industry this year, as operational costs continue to rise and companies turn their focus to projects that will deliver the greatest run on investment. Since 2012, the percentage of industry leaders planning to step up investment in new projects has dropped by 18%.


Peter Bjerager, DNVGL’s Division Director Americas said, ‘the industry is particularly positive in the USA thanks to the expansion of the unconventional oil and gas sector and rising offshore production, but the outlook is clouded by difficulties in finding skilled professionals, particularly project managers and offshore related engineers, which is driving up day rates to a median of US$ 1000. Rising costs and uncertainty over the oil price will also cause the industry to keep a tighter rein on capex.

‘This cones during a period when we are starting to see signs of greater consolidation across the oil and gas industry supply chain. Our research gives clear signs that pressure will be put on suppliers to become more innovative, to reduce costs and to show value in 2014 by providing access to scarce, in demand skills and demonstrating real quality in the products and services they deliver.’

Costs and the supply chain

According to the report, in response to the rising costs, operators will more often seek to rely on bigger supply chain partners that are more capable of providing a consistent global service. 16% of North American respondents say that their company will increase its use of larger partners.

DNV GL’s research also affirms that operators will focus on controlling risks and costs by seeking greater standardisation in their procurement approaches. This gives rise to greater interest in operators centralising, standardising and streamlining their supply chain to avoid costs in creating new solutions.

According to the report research, companies will also increasingly ask suppliers to be more consistent in their approach to quality and risk management. 52% of the respondents plan to increase efforts here and the focus on quality management systems will be heavily pointed to companies’ supply bases: 57% are aiming to increase their focus on quality management systems, with a specific aim of ensuring better supply chain consistency. 

Adapted from press release by Claira Lloyd

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