Working capital focus could give oil and gas firms £200 billion boost

Paul Snell is managing editor at Supply Management
28 October 2015

Oil and gas companies across the world could unlock £217 billion by improving working capital.

According to PwC with a consistently lower oil price on the horizon, businesses in the sector face a greater focus on cost efficiency. But UK firms could find £20 billion by boosting working capital, a report said.

Alison Baker, oil and gas leader at PwC, said: “Oil and gas firms are facing a future of low oil prices and, as a result, being cost effective in a $50-$60 per barrel world will be vital; every move they take to achieve this will be crucial in securing their long term survival.”

She added many firms in the supply chain were looking to make cost reductions of 30 to 40 per cent, and more working capital could help fund these transformation projects.

Tactics to boost working capital in the sector include increasing the length of payment terms down the supply chain, improving inventory and contract management. Exploration and production firms have attempted to renegotiate contracts to improve terms during the price fall.

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