Project Management in the Oil Offshore Marine Industry

The oil and gas industry, also known as the petroleum industry, is unique in many ways. For one, many other industries, such as transportation, manufacturing, pharmaceuticals, food packaging, and agriculture, to name a few, are vitally dependent on it, either for raw materials or as energy supply. The aspect of the oil industry is also very wide, and has been generally divided into 5 segments, which are upstream, downstream, pipeline, marine, and service and supply. The upstream segment includes exploration, development and production activities.

Offshore Exploration, Marine Transportation

In this century, offshore exploration has become noticeable for several reasons. Either onshore resources have been exhausted, they are not economically producible, or they cannot be fully developed because of restrictions. The prominence of offshore exploration and production has led to significant growth and improvement in marine transportation also, either by underwater pipelines or tanker carriers.

All in all, the oil offshore marine industry continues to be of importance in our civilization today, but with its fair share of problems as well. For instance, increased global supply and falling prices make cost cutting necessary. And the best way to implement it without affecting performance is to increase efficiency. Thus, effective project management has become essential in both the short and long term.

What is Project Management

The PMI defines project management as the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. A project, which is temporary and unique, is deemed a success when the final deliverable meets the requirements within the agreed time, budget and quality. By making use of project management as a discipline, organizations and enterprises are able to focus on the goals, resources, and schedules of their projects, and deliver the results that they need.

Project Management in the Oil Offshore Marine Industry

The oil offshore marine industry faces many challenges. Petroleum is a non-renewable natural resource. Sooner or later, the industry will have to face its depletion. Also, production in the US and Canada are increasing, but established producers are refusing to cut supply, so there is an increase in global supply. At the same time, there is a move to save energy, cut emission, and develop alternative renewable sources, resulting in only a steady demand, leading to lower oil prices. Furthermore, technological advances have allowed offshore exploration to go farther out to sea, to drill deeper, and to produce and transport products over or under marine surfaces. In the short term, project management can help improve efficiency in the planning, execution and delivery of projects for the oil offshore marine industry. In the long term, the increasing levels of competition, risk and uncertainties can be better managed by project professionals who are knowledgeable of best practices and equipped with applicable skills.

Top 5 Best Companies in the Oil Offshore Marine Industry

Another uniqueness of the oil and gas industry is that most supply is controlled by state agencies rather than private companies, and most are in the Middle East. The industry can be divided into international oil companies (IOC), and national oil companies(NOC). IOCs are multinational publicly traded companies. The top 5 IOCs by reserve size are:

  • ExxonMobil
  • Royal Dutch Shell
  • BP/Amoco
  • Total SA
  • Chevron

On the other hand, the top 5 NOCs by reserve size are:

  • Saudi Aramco
  • National Iranian Oil Company
  • Qatar Petroleum
  • Iraq National Oil Company
  • Petroleos de Venezuela

Some Figures and Values

Oil companies are among the largest in the world. In fact, among the top 10 companies worldwide based on revenue, six are in this industry. Crude oil prices fluctuate between $50 and $70 per barrel nowadays. The world has a reserve of a little over 1,700 billion barrels. In 2017, ExxonMobil reported $232 billion in revenue, Royal Dutch Shell with $256 billion, and BP with $200 billion. On the other end, the global online project management software is expected to reach $6 billion by 2025. Interestingly, one of the online PM software markets considered under penetrated but holding great potential is the Middle East.

Conclusion

The oil price collapse started in 2014, and this brought about cost reduction in many businesses especially engaged in the upstream sector. Companies slashed capital expenditures, hundreds of thousands of workers were terminated, and many major projects were canceled or deferred. However, project management can definitely help improve efficiency in new oil offshore marine projects. In fact, a good example project is StatOil’s Sverdrup field in the North Sea. Because of efficiency improvements, break-even price of the development costs has been reduced to about $25 per barrel.

Recommended Project Management Software

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Jose Maria Delos Santos

Jose is a subject matter expert and member of the writing team for Project-Management.com and Bridge24. He has written hundreds of articles including project management software reviews, books reviews, training site reviews, and general articles related to the project management industry.