Global oil and gas industry ‘vulnerable’ to legal risks

Oil and gas companies across the globe have admitted they are exposed to mounting legislation, but are struggling to put in place safeguards to protect themselves according to new research.

• More than a quarter (28%) of large oil and gas companies said it is likely or very likely that their suppliers will expose them to mounting legislation.
• A near-identical percentage (26%) admitted they are not prepared to deal with the risk.
• One in 10 oil and gas firms don’t have health and safety information for main suppliers.
• More than one in three (37%) do not have health and safety policies for suppliers in lower tiers.

Results were revealed in a survey of 97 large oil and gas companies across the UK, USA, Spain, Australia, Asia, Brazil, South Africa and the Middle East. The study was carried out by independent consultancy IFF and commissioned by Achilles, which works on behalf of 200 oil and gas buyers globally to manage risks associated with 15 000 suppliers.

James Palmer, Director of Strategy and Commercial Development at Achilles, which carries out 2000 audits a year in Oil and Gas, said: “Oil and gas companies are facing a perfect storm of risk. In the current economic environment facing the industry, the risk that suppliers and contractors take short cuts in terms of compliance inevitably increases. At the same time, the large operators are having to make thousands of redundancies across the globe, with fewer people in compliance departments to gather and check critical information from suppliers and assess their capabilities. This is a critical issue, considering that around 85% of personnel working offshore are contractors.”

Oil and gas firms across the globe face severe penalties for non-compliance with laws and regulations – including termination of licences.

“Health and safety risk is ever-present in oil and gas, and ensuring people get home safe from work is non-negotiable, no matter how challenging the market becomes,” added James. 

“In our experience, firms can best protect themselves by putting in place an effective pre-qualification programme, supported by a robust plan of desktop and physical auditing.”

Adapted from a press release by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/special-reports/18042016/global-oil-and-gas-industry-vulnerable-to-legal-risks/