By CHIOMA OBINAGWAM
THE Association of Chartered Certified Accountants (ACCA), in its new report, has outlined the key things business leaders in the oil and gas sector need to master if they want to be successful in the most volatile and competitive era the sector has ever seen.
With oil prices plummeting to $33 dollars a barrel and further drops in price not out of the question, Toyin Ademola, head of ACCA Nigeria said:
“Right now, the risk of going under is a very real one for many oil and gas companies. Three major factors have combined to create a perfect storm in the sector. One lower cash-flows due to depressed oil prices. Two – the existing debt overhang. And three – the so-called ‘great crew change’ as the impending retirement of senior expert professionals over the next five years leaves a talent vacuum in its wake.”
According to Toyin Ademola, after analyzing market conditions and taking the views of a range of key strategic players in the sector, four key areas of focus emerged.“The key to navigating the choppy waters we are currently experiencing in the oil and gas sector is good management of growth, costs, funding and externalities. Get those four factors under control and you give your organization the best chance of success.”
In terms of growth management, she advised Oil chiefs to identify and post-pone projects with a high degree of uncertainty.
She said they should seek partners to share in the risk and reward, of projects, which could be through part-sale of operating interest in new discoveries.
In the area of costs, she urged them to concentrate their asset sales on those not central to long-term strategy as much as possible and added that organizations with a strong core focus are always better prepared in times of extreme stress or volatility.