Managing Director, Global natural resources
It was another challenging year for natural resources, however we saw revenue growth return in the last quarter of 2016-2017. We expect this to continue following increased activity amongst clients.
The sector has experienced signs of recovery after a significant period of low commodity prices. Projects are returning with lower capex and operating budgets and a greater focus on cost, schedule and risk prior to any financial investment being taken.
While decision-making is slower, there has been growth in capital investment in mining and metals with projects returning for evaluation and funding as commodity prices stabilise and increase. Oil and gas operators are assessing what USD 40-50 per barrel means for future developments, but we are expecting further sanctioned projects in the next 12 months and beyond.
Last year, we made a strategic decision to retain talent despite major capex decline. Moving and upskilling our staff to work in other sectors and industries unlocked their knowledge and lessons learned and provided capability benefits to our global clients in infrastructure and real estate.
New strategies across the sector have created opportunities for our business. Given our independence from the supply chain, our clients recognise the challenges in securing successful project delivery and the role we perform in the pre- and post-sanction process.
In oil and gas, we continue to deploy managed services to downstream operations such as SABIC’s petrochemicals plant in Teesside, UK, where we have a team of 24 cost consultants. In upstream, we are providing project management support services to Oil Search in Sydney on their upstream assets and social infrastructure projects in Papua New Guinea.
There has been a notable increase in focus on decommissioning as more facilities reach cessation of production, with clients recognising the need to re-evaluate their liabilities. On these types of projects, we support our clients to assess the cost, schedule and risk required to safely and efficiently decommission their offshore facilities – such as Fairfield Energy on their Greater Dunlin Area decommissioning project in the North Sea. The Performance Forum, a joint industry programme, continues to capture operators’ decommissioning cost and schedule data on behalf of the members in a consistent manner to enable better decision-making on these projects.
Mining and metals saw strong performance in Australia and Latin America, with anticipated growth in Africa and North America due to the increase in capex in the next financial year. We are working on major projects such as the Oyu Tolgoi mine in Mongolia, in addition to working for mining and metal mid-tiers and juniors including Minsur, Platreef and Yamana.
We are building a reputation for our global capability, technology, knowledge and data to drive future capex performance and also to enhance our client decision making through the whole project life cycle.
In the last year, we have invested in additional geographic regions, with support to clients in Argentina, Colombia, Democratic Republic of Congo and Mongolia with project set-up and management. We continue to review and secure new routes to markets including engagement with several independent investors.
In the year ahead we expect an increase in the number of developments to have economic and technical reviews undertaken, however only those with robust economics will reach final investment decision. Our ability to manage and control cost, schedule and risk throughout the stage gate approval process will provide major confidence to our global clients, as they manage and assess the impact of the low-cost environment.