By Sarah Byrne
REGULATION and industrial relations need significant improvement for Australia’s LNG industry to be a success, according to Accenture Asia Pacific Energy lead Bernadette Cullinane.
Ms Cullinane, a co-author of the ‘Ready or Not? Creating a world-leading oil and gas industry in Australia’ report, told Oil & Gas Australia there have been some changes since the report was released in May 2015, but the industry was still being held back in a number of critical areas, especially given the low crude oil price scenario.
Industrial relations and local regulatory frameworks were mentioned as being a continuing hindrance to a smooth industry transition from project construction into the operations phase.
“Some of the barriers we identified in our research are the need for a more flexible industry relations framework and a more consistent regulatory framework in Australia.”
“These areas still need to be improved,” Ms Cullinane said.
Inconsistent regulatory requirements and the time and money spent complying or dealing with government regulation, licensing processes and bureaucracy were key concerns also outlined in the report.
Accenture’s research found that industrial relations requires more flexibility in wage determination and less onerous hiring and firing practices, while the regulatory framework must be made more consistent and the burden of bureaucracy reduced.
“Furthermore, the high cost structure of the Australian oil and gas industry puts it at a competitive disadvantage compared to Qatar, the US Gulf Coast (which exported its first LNG cargo in January) and in the future east Africa and western Canada.”
“Thus, it is important that there is strong collaboration between operators, service companies, the government and regulators; that all stakeholders are focused on improving competitiveness; and that the industry becomes a leader in innovation and technology,” Ms Cullinane added.
One positive initiative Ms Cullinane mentioned is the government and industry funded Oil, Gas and Energy Resources Growth Centre.
The centre was launched to drive competitiveness and industry collaboration, as well as focussing on innovation.
Ms Cullinane said while the research centre was a good example, there is still a need for the government and industry to work together and have a less fragmented approach.
“It very much still remains a challenge that needs to be addressed in 2016 in order to make the industry more competitive, and there really is no time to waste,” she said.
A challenging low commodity price environment and the addition of exports coming from other competitive regions make it more important than ever for Australia’s resources industry to get competitive, Ms Cullinane said.
“The awareness is there, but more action needs to be taken.”
Ms Cullinane said attitudes, joint partnerships and companies working towards the long term capability of the industry are fundamental to the industry succeeding.
“It is about the operator and services companies working together to meet joint KPIs and joint measures of productivity and joint benefits that can then support the future development of capability.”
On the positive side, Accenture’s research outlined that many companies have been anticipating this transition phase and have been making the necessary strategic actions to be ready for the challenges of the operations phase.
Ms Cullinane pointed to the example of industry re-skilling and training construction and mining workers to make them suitable for employment in oil and gas production operations.
Alongside this has been the establishment of a number of specialist training and education facilities focused on training skilled workers for the processing industries, including the Australian Centre for Energy Process Training (ACEPT) in Western Australia, the North Australian Centre for Oil and Gas in the Northern Territory and the Onshore Petroleum Centre of Excellence in South Australia.
Ms Cullinane said Australia is uniquely placed to take advantage of its world class natural gas resources – provided it ensures that the right skills are developed and maintained.
“The skills and experience of the sector will truly be the envy of oil and gas producing nations and it is important that Australia embrace the opportunity to become “Australia Inc.” in LNG and create export related services in LNG operations similar to what Norway did.”
In the “Ready or Not? Creating a world-leading oil and gas industry in Australia” report, Accenture outlined a number of recommendations that could help Australia achieve a world leading LNG position:
- Accelerate the development of experience – focus on innovation and the rapid adoption of global leading practices and learnings from other regions.
- Integrate industry operating models – by improving overall competitiveness it will make it easier for organisations to do business with one another.
- Industry optimisation through standardisation – there is a need for standardised industry processes and practices across the value chain for example; qualification processes, contracting terms and conditions, and turnaround planning and execution.
- Collaborate with intent – the recent launch of the Energy Industry Collaboration Group (EICG) is a strong step forward in filling the collaboration void between the services sector and operators.
Sharing of best practises at industry forums, such as the upcoming AOG event be held in Perth, are vital to the industry’s growth, Ms Cullinane said.
Commenting on AOG, which kicks off in late February, Ms Cullinane said she is excited about AOG and taking part in the event.
“There is a buzz in the industry about this being the first conference of 2016.”
“It is a big year for LNG and for oil and gas in Australia.”
“I believe it [AOG] is a world class gathering bringing together industry professionals, not just from Australia but from around the world.”
“We will take the opportunity to connect with industry leaders, everyone participates to share points of view and have discussions and exchange best practices to open the door to new things, to get access to creative ideas and innovation.”
“All of these things are what the industry needs to do to take steps together to support innovation and collaboration, to reduce bureaucracy, to reduce barriers across the stakeholders and to make the industry as competitive as we can.”
Ms Cullinane will make a presentation on the topic ‘Ready or Not? Australian LNG Industry Capability’ at the AOG conference on the morning of Thursday, 25 February, 2016.