Background

The global energy industries have always been responsive to their markets, and have undergone enormous changes during the last two decades in particular.
The public perception that energy products, and particularly oil and gas, should be available at ever-reducing prices in real terms generates tremendous pressure on the producers constantly to find ways to reduce costs of production. The oil and gas producers have responded magnificently to this pressure over a sustained period of time by finding increasingly imaginative ways to produce more from their assets while reducing the overall operating costs.
One of the most powerful cost-reduction methods employed has been the extensive outsourcing of many functions which would generally have been conducted in-house during the period up to the 1980's. The contracting out of major projects and even of significant elements of the ongoing operations has led to remarkable improvements in the efficiency of deployment of resources, and generated the required cost-reductions. This desirable end effect has inevitably been accompanied by major structural changes in the industry :

• the oil and gas companies have reduced steadily in terms of number of employees per asset unit value, as these companies have progressed steadily towards a business model in which they would be, first and foremost, asset managers. In this process the oil and gas companies have accepted the loss of in-house expertise in a range of established technical areas and have not even attempted to bring many of the new technologies within their own control, as they might have done in earlier times.
• the role of oil and gas contracting companies has increased dramatically and, as the demands have grown, the market has necessitated the merger of many of them to allow them to finance the provision of the major services required by the oil companies.