Advantage

Our operational excellence is reinforcing our competitive position.

We believe that the dynamic economics within the industry play to Petrofac’s strengths in operational excellence – as well as our flexible approach and our expertise in developing innovative commercial approaches with our clients.

With our strong ethos of balancing quality with cost-consciousness, we had already begun to adapt to price constraints in the industry before the reduction in oil prices.

As clients consider any new investments, or seek to improve their existing operational efficiency, it is abundantly clear that now, more than ever, they will demand certainty of delivery and budget, and will incentivise gains in efficiency. In particular, we believe they will look for three key things from their suppliers:

  • Proven capability to deliver
  • A competitive cost base with a culture of cost control and incremental improvement
  • A willingness to share execution risk – whether that be through a lump-sum EPC contract or a performance-related operational contract

Also, while we would not want to downplay the challenges faced by our sector, the lower oil price environment continues to offer some new opportunities for a company such as Petrofac, including:

  • Reduced executional risk – in a low-inflation environment, executional risks such as cost over-runs and shortages of key materials, equipment or components, can be reduced
  • Increased availability of hitherto scarce skills – in past years the industry has faced an acute skills shortage. The new industry economics alleviate this pressure, making it easier and cheaper to access expertise
  • Improved access to adjacent market segments –Petrofac is continuing to build its credentials in the downstream market, which tends to be less sensitive to oil price fluctuations

Given our business model and our distinctive, delivery-focused culture, the new environment represents a definite opportunity for us. It also means that, when oil prices do eventually recover, Petrofac can emerge in an even stronger position.

Positioning

Petrofac is well positioned and has strong credentials in promising sectors of the market