Aker BP Alliance Delivery Model
Reorganising relationships within the subsea supply chain to maximise value
This year has been one of optimism in the natural resources sector and we have noted increased investment and activity from global, regional and independent clients.
This is due to a combination of improved commodity prices and results gained from efficiency improvements take effect. As a result, our natural resources business performed well, with revenue growth of eight percent during 2018–2019.
The last 12 months has seen many of our natural resources clients rethinking their strategies to support a decarbonised future. While oil and early-stage bulk commodities are still required, technological and legislative advances in clean power demand an increase in raw and refined minerals.
Our business has been at the forefront of strategy planning to meet the demands of our clients as they pivot to this more sustainable way of doing business. Natural gas, considered a cleaner source of fuel for power generation, was a primary area of growth for our business.
We have been supporting our clients to apply cost and commercial discipline and take ownership of optimal asset delivery across the full lifecycle.
In mining, companies benefiting from the booming battery metals market in Western Australia and Latin America in particular have seen sustained growth due to the demand from the burgeoning electric car sector.
The USA is now the biggest global producer of oil and gas and our Houston operations have performed particularly well this year. We are supporting all the major producers in the Permian Basin and have secured new managed service contracts on several greenfield projects, including recently approved liquefied natural gas (LNG) developments and petrochemical plants. Early in 2019, we won a managed service contract to provide project controls at one of the USA’s largest refineries.
Additionally, we continue to support our clients with their mine closure projects. Working with technical engineers and environmental consultants to fully understand the challenges, and develop the estimates and cash flows by which these closure programmes can be commercially managed is key to leaving an enduring positive legacy in the local community and for the environment.
We have also had success in broadening our service offering, which has resulted in a large cross-service project management consulting (PMC) win with an Australian mining and metals client.
We have increasingly worked with our clients to help them use digital tools to manage their assets. Our QuanTTum service is our digital solution, providing more project control and driving performance through engineering and construction work.
The Performance Forum continues to provide the oil and gas industry with insights into cost predictability through benchmarking and enables member companies to optimise project performance.
In the last 12 months, this support has been brought into sharp focus, with many companies claiming they have come in ‘under budget’ or ‘ahead of time’.
In addition to supporting clients on ‘sustaining’ capital, we leveraged our advisory services to ensure projects were set up well from the outset.
This is particularly important in emerging or dynamic markets, and to foreign investors where a stringent approach and more certainty on key project drivers such as costs, schedule, risk and return on investment are required.
The success of business improvement initiatives, such as the contract model delivering strategic partnerships and alliances for Aker BP, have shown tangible benefits.
Through increased supply chain collaboration, the company has accelerated delivery times, improved efficiency and reduced costs. Aker BP reported the first project completed by the subsea alliance, which was delivered 30 percent below its target cost. Subsequent subsea projects are continuing to deliver savings.
Looking ahead, we anticipate the optimism in the natural resources sector to remain, driven by stabilising oil and commodity prices and the need to develop local infrastructure and economies.
This will prompt not only investment in capital projects, but rehabilitation initiatives such as the natural gas infrastructure programme we are supporting on behalf of the Basrah Gas Company in the Middle East.
Africa in particular will be a key focus, with continued work to establish our presence in Mozambique and Nigeria.
We also expect USD150–200bn to be invested into LNG projects globally in the next 24 months. This, along with the growth in lithium-ion demand, presents a strong opportunity and will support our growth ambitions.
Our wider estimating expertise, data management and tools, positions us well to support our clients as they look to develop the design, budgets and schedules to deliver these projects within economically viable time, cost and sustainability goals.