Monday 23 March 2009

New supply chain initiative helps industry overcome economic challenges

In an effort to ease business relationships in the current economic climate and help companies overcome financial difficulties, Oil & Gas UK has launched a confidential 30-day payment help-line for the oil and gas supply chain. The unique service will act as a listening post for problems in the supply chain by asking the supplier community to give feedback on customer / purchaser behaviours and practices that are adversely affecting their ongoing business viability, focusing in particular on the speed at which invoices are paid during the current climate of tightened credit and banking facilities.  

The intention is to inform the industry's trade association about concerns that could be addressed by targeted industry initiatives or, if appropriate, engagement with specific companies.

Paul Dymond, operations and supply chain director with Oil & Gas UK, said: "We would like to encourage all member and non-member companies within the oil and gas supply chain to contact us through these links to let us know their experience with payment terms, so that we can identify appropriate industry responses. It is important to stress that information will be held in confidence and only shared in a generic, non-attributable form unless with the express written sanction of the provider."

The new helpline is one aspect of a wider plan to help industry get through the current economic challenges and come out of the recession even stronger. Malcolm Webb, chief executive of Oil & Gas UK, explained: "Oil & Gas UK has identified a four point action plan, which, if delivered, would mitigate the worst effects of the banking crisis and recession on exploration and production and ensure that the short-term difficulties the industry is facing do not create long-term damage to the industrys productive capacity.

"The first point of the plan is all about how we as an industry can help ourselves. The industry needs to take responsible actions on payments and costs, adhere to the codes of practice, maintain investment in skills and training and act in a determined and sensible way to reduce costs without negatively impacting supply chain companies. The new 30 day payment line will form the basis of this first action point helping us address undesirable behaviour within the industry on payment terms.

"However, there is only so much industry can do to help itself and the last three points of the plan require action from Government. We need to work together to unfreeze the flow of debt and credit facilities from the banks. The Government will also need to rethink the current tax regime. In particular, Government must throw a lifeline to the small exploration companies by agreeing to release accrued relief on exploration costs so that it can be reinvested now in North Sea projects. Finally, the Government needs to use the value allowance it has already proposed in its recent tax consultation to effectively eliminate the 20% supplementary corporation tax from all new projects.

"As an industry, we are doing our bit to address and overcome the current economic challenges. We are now looking to Government to deliver their parts of the plan."

To share their experience with payment terms, companies can call 07980 897876 or e-mail: scconcerns@oilandgasuk.co.uk

 

 

 

For further information contact Britta Hallbauer on 07891769113