A new report by Arthur D. Little urges international oil companies (IOCs) to rethink traditional models of asset management and consider moving towards a more integrated and cross-asset view in order to ensure long-term success in a changing marketplace. In “Time for Change – Oil Company Asset Management,” the consultancy’s Energy and Sustainability practices argue that traditional asset-based organisation and asset lifecycle management systems are not sufficient for the road ahead.
The report identifies that most published IOC growth strategies rely heavily on an outlook of sustained growth in oil demand and ever-rising prices, and explains why structural issues must become a priority for IOCs.
“Fat profits in the past have masked a number of structural changes such as the rise of national oil companies and the end of ‘easy oil’,” say Paolo R. Dutto Associate Director of Arthur D. Little's Global Energy Practice. “However, the oil price collapse at the end of 2008 showed that the industry cost structure had not come down to the same extent as prices.”
As the investment community re-assesses the sources of risk and reward based on anticipated environmental regulation, carbon exposure is emerging as a key risk indicator. Leaders charged with safeguarding and growing company value must explicitly communicate how carbon costs factor into their investments, business models, and growth strategies.
The report urges CEOs to rethink what asset management means to their future business models and introduces Arthur D. Little’s innovative Asset Performance Dashboard, which bridges the gap between portfolio and asset perspectives with a holistic approach.
“The Dashboard is a shared information platform, which allows continuous monitoring of the asset portfolio and gives owners of key management decisions the input they need to integrate industrial and financial results for better overall performance,” add Stephen Rogers, Global Leader of Arthur D. Little’s Global Energy Practice.  “In a low carbon world, IOCs can benefit from this tool, as it provides the integration and performance control and improvement needed to weather the industry rollercoaster ride that may be ahead.”
The Time for Change report is now available for download at
http://www.adl.com/timeforchange