Business Performance and Governance Visual Presentation B01: Navigating economic headwinds: proven strategies for durable cost reduction in oil and gas

Abstract

Business Performance and Governance Visual Presentation B01

The Australian oil and gas industry faces significant challenges – including ageing assets, regulatory delays, fluctuating market prices, declining production and pressure to achieve net-zero emissions – leading to a strong focus on cost reduction. While cost reduction programs are common, sustained success is rare. Research suggests that only ~10% of such programs maintain results after 3 years. This abstract explores key factors contributing to successful and sustainable cost reduction. It outlines a structured approach, emphasising the importance of aligning cost reduction with strategic objectives, conducting thorough upfront diagnostics, prioritising key initiatives, clarifying accountabilities and embedding robust cost management processes. Drawing on a case study from a global oil and gas company where this approach delivered US$90 million in operational cost reductions and US$20 million in capital expenditure savings, the abstract provides practical guidance on achieving and sustaining significant cost improvements through leadership development, process and systems enhancements, and fostering a culture of operational discipline.

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