Planning for the future in any sector is tough at best, but in the energy industry the myriad of factors that affect energy prices makes forecasting particularly challenging. ATPI Griffinstone specialises in managing travel for the major players of the oil and gas industry, from those in the Exploration sector to Engineering and Drilling Services, and the list of considerations is extensive – not to mention diverse.
Weather events, political decisions and international treaties can cause our clients’ business plans to change in a heartbeat. Between 2014 and 2016, statistics from McKinsey & Company show that oilfield services and equipment (OFSE) sector revenues dropped, meaning the low crude oil prices led to reduced exploration and production activity. This inevitably affected the travel spending as well as other support services in the industry.
Nevertheless it is vital to take a long-term view, and thankfully, the good news is that the trend is positive. Growing demand from China and India, a trimming of supply from OPEC and Russia and political uncertainty has pushed up crude oil prices. This has also boosted investments in oil and gas exploration since 2017, which is expected to continue to rise a further 6 percent by 2025 according to Rystad Energy. In addition, Rystad Energy predicts that offshore investments are set to rise in 2019 after decreasing year on year during the industry downturn. The forecasted rise represents the first time that shale investments will not overtake offshore. With all this in mind, travel management companies (TMCs) have been under pressure to help our clients reduce costs and seek out better-value deals.
TMCs have spent some time showing how they can help firms go about their business in the most cost-effective way. It is unsurprising that we have been tasked with demonstrating our ‘value’ proposition – can we negotiate better prices to safely move those mission-critical travellers? Have we got the ability to streamline travel buying and hotel contracting for global operations? Can we give clients the data they need to better understand where they are spending their money? And perhaps the most important factor of all – can we help companies benefit from a higher level of staff efficiencies?
The answer is yes and if you’ve got a good TMC you’ve probably done all of that already. But that doesn’t mean there isn’t room for improvement as better times peek out from behind a cloud.
At ATPI Griffinstone our booking patterns show that the volume of travel is beginning to increase, typically an indicator of renewed exploration activity. In aviation, maritime and commercial shipping there is still no substitute for oil, while natural gas is increasingly viewed as the obvious replacement as coal power disappears. All of this plays a part in the demand for travel programmes in the energy sector and a forecast increase of up to 30% by 2040.
Operators have done much of the hard work in re-evaluating their travel programmes in the downturn – ironically something they may not have done had prices been higher and the industry more buoyant. Now, companies should have a more integrated approach to travel procurement, with a more targeted list of suppliers offering great value. And with that in mind, it is time to make the most of the savings, while setting your TMC some fresh challenges.
One of the biggest areas is the issue of ‘total trip cost’. Historically energy firms haven’t been focused on this, considering the airline fare element the most important. TMCs are experts at getting best value for ground transport and managing hotel programmes to get best-available rates. They can also advise on expense management too, helping clients keep a firm control on overall spend.
Another area to consider is how travel can be integrated into your HR operations. Technology today can link in with personnel systems seamlessly, allowing companies to better manage crew changes, set reminders for vaccinations and visa renewal and handle holiday which means you always have the right and relevantly-qualified staff available and it reduces the need for manual checks. A travel workflow management tool specifically designed to help manage complex, end-to–end travel for the offshore energy sector can deliver important benefits such as better control, greater process compliance. optimised traveller safety and comprehensive reporting.
It is also worth making sure your TMC can demonstrate that it is continuously benchmarking your travel programme against similar organisations. At the same time, consider refreshing your policy rules at regular intervals. Look out for TMCs that have specialist tools in place to provide comprehensive reporting that can be flexible to your management information demands. Both of these steps will ensure you are working with the travel suppliers best suited for your requirements and have the measures in place to benefit from an efficiently managed travelling workforce.
When it comes to forward planning in the most complex of sectors, the devil is in the ever-changing details.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/07122018/raising-the-stakes-when-business-challenges-deliver-a-greater-recovery/