Five years of collaboration in the UK upstream oil and gas industry

Strat. Change, 9, 249–263 (2000)

Strategic Change, June–July 2000Copyright Þ 2000 John Wiley & Sons, Ltd.

Richard Green Five years ofOffshore Management Centre, AberdeenBusiness School, The Robert Gordon collaboration inUniversity, Aberdeen

the UK upstreamWilliam KeoghCentre for Entrepreneurship and SMEs, oil and gasAberdeen Business School, The Robert GordonUniversity, Aberdeen industry

ž Many collaborative relationships(partnering and alliancing) betweencustomers and contractors in the UKupstream oil and gas industry wereformed in the five years up to 1998.

ž The content of 63 practitioner papersfrom six specialist commercialconferences on partnering andalliancing (three from 1993/94 andthree from 1997/98) has beenanalysed to investigate whether theindustry’s thinking has changed overthe period.

ž Overall, the most frequentlyoccurring concepts are those whichappear in the general literature oncollaborative relationships. Therewas not a marked differencebetween the concepts used in theearly conferences and those used inthe later ones.

ž The early papers did show a slightlyheavier emphasis on concepts thatcould be said to be theoretical,whereas the later papers had slightlymore emphasis on concepts thatcould be attributed to experience.Copyright Þ 2000 John Wiley &Sons, Ltd.

Richard Green and William Keogh

Copyright Þ 2000 John Wiley & Sons, Ltd. Strategic Change, June–July 2000

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Introduction

This paper considers the evolution of col-laborative relationships (partnering andalliances) between companies in the UK’supstream (exploration and production) oil andgas industry since 1992/93. From that time, theindustry realized that adversarial relationshipsnot only added to its costs but also threatenedits continued existence.

In the years after 1993 there have been manyexamples of close-working relationshipsbetween operators and contractors in majorprojects and in ongoing maintenance activities.The BP Andrew field development project asdescribed by Knott (1996) is one such exam-ple. Some of the relationships appear to bevery successful and others have not deliveredthe expected benefits (see Bower and Keogh,1997a and 1997b and Crabtree et al. 1997).There is now a body of hard experience ofwhat makes for success in such relationships,and it appears that this style of working is nolonger regarded as novel.

At the end of 1998, the dramatic fall in oilprices placed severe cost reduction pressureson the industry and triggered a series of merg-ers, acquisitions and internal restructuring by

The dramatic fall in oil pricestriggered a series of mergers,

acquisitions and internalrestructuring

companies. Since that time there appears to beless emphasis on partnering and alliances in theindustry, but collaboration across the wholesupply chain is under active discussion (CRINENetwork, 1999). The recommendations froma joint task force between government andindustry in 1999 led to the creation of LOGIC(Leading Oil and Gas Industry Competitive-ness) to promote collaboration across theindustry (Oil and Gas Industry Task Force,1999).

This paper summarizes the business environ-

ment of the upstream oil and gas industry, andexamines the nature of collaborative or longterm, relationships between companies. Thecontent of a set of papers from commercialconferences on ‘Partnering and Alliancing inthe Oil Industry (1993 to 1998) is then used todetect how the industry’s ‘thinking’ had evol-ved until mid 1998.

The UK upstream oil and gasindustry

Oil and gas has been produced from the UK’sreservoirs since 1967, and although the indus-try is past its peak, it remains an importantcontributor to the UK’s economy. The DTI‘Brown Book’ (Department of Trade and Indus-try, 1999) reports that the oil and gas sectorcontributed £3 billion to the balance of pay-ments in 1998 and Government revenue fromthe industry was approximately £2.6 billion in1998/99. In addition, the UK oil and gas indus-try is currently estimated to be responsible forthe direct and indirect employment of over300,000 people in the UK (Department ofTrade and Industry, 1999).

Offshore oil and gas is produced from wellsdrilled from seabed to reservoir. Before trans-port to shore, by pipeline or by ship, the oiland gas is processed on production platforms(which stand on the seabed or float on the sea).Production platforms are complex installationswhich need continuous maintenance andmodification, and which require a large rangeof services including engineering, painting,diving, catering and medical support. Theengineering materials needed for operation ofthe platform, and food and materials neededby the people working there, are supplied byboat. Helicopters transport people to and fromthe platforms. Operating and maintenanceexpenditure by the industry in 1998 is reportedas £4.2 billion (Department of Trade and Indus-try, 1999).

The development of a new oil and gas fieldis a major engineering project which can costhundreds of £ millions and which employsmany hundreds of people in design, con-struction and commissioning over a period of

Collaboration in the upstream oil and gas industry


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three to five years. The drilling of explorationor appraisal wells in the search for new oil andgas fields is again a high cost operation. Drillingbarges are also complex structures, whichneed to be maintained and supplied. Invest-ment in exploration, appraisal and new instal-lations was £5.1 billion in 1998, which is 17%of total UK industrial investment (Departmentof Trade and Industry, 1999).

The ultimate customers for goods and ser-vices in the industry are the 25 or so operatingcompanies which own and produce the oil andgas. They tend to be large multi-nationals, suchas BP, Shell or Conoco, and they are supportedby around 50 major contracting companies, forexample the Halliburton Group. The industryis further supported by an estimated 2000 com-panies (contractors and suppliers) whose sizevaries from large to very small, and which sup-ply a multitude of goods and services.

The research reported in this paper con-cerns the relationships between the operatingcompanies and the contractors and supplierswhich support them in the design, devel-opment and maintenance of oil and gas pro-duction installations.

Overview of collaboration(partnering and alliancing)

Evolution

The UK upstream oil and gas industry (theindustry) faced a crisis in the early 1990s (seeWoolfson et al., 1997, p. 302). For a varietyof historical reasons, its costs were high andrising, and at the same time the projectedrevenues from new and existing fields werefalling. At the end of 1993, the summaryreport from the cross-industry CRINE (CostReduction Initiative for the New Era) initiativestated that:

North Sea development costs can be in theorder of 4 to 6 times greater than theirlower cost counterparts in other oil andgas provinces, such as the Gulf of Mexicoand the Pacific Rim . . . (UKOOA, 1994).

Studies by Kemp (1993 and 1994) suggestedthat, by reducing its costs, the industry wouldincrease its size substantially and extend its lifeby many years.

One of the industry’s reactions to rising costswas to realize that the traditional adversarialrelationships between companies, which hadevolved since the 1970s, were a source ofinefficiency and high costs. There was a rec-ognition that by working together the UKindustry could lower its costs and increase itschances of long term survival. The first CRINEreport (UKOOA, 1994) suggested that:

A shift is required, not only in the waythe industry conceives, designs and buildshardware, but just as importantly, in theway the industry interacts as a whole . . .The culture envisioned by CRINE is onecharacterised by teamwork and openness.It is one where the full potential of peopleworking together towards common objec-tives can be realised and all parties havethe opportunity to prosper.

It is interesting to note that at about the sametime the UK’s onshore construction industrywas also beginning to recognize the drawbacksof adversarial relationships (Latham, 1994).

The adoption of more collaborative styles ofworking by the oil and gas industry acceleratedafter 1992, and by 1998, such relationshipswere widely recognized and accepted. ‘Part-nering’, ‘alliancing’, ‘performance relation-ships’ and ‘collaborative contracting’ are someof the terms which have been used to describethe changed relationships. In the early years,the move towards these relationships was ledby BP Exploration and Shell Expro, who letsome massive refurbishment contracts in theperiod up to 1994 (Woolfson et al., 1997).

After five or six years’ experience of part-nering and alliancing, the majority of the oiland gas companies and their contractors nowembrace, at least partially, a more collaborativestyle of working. Several examples of successfulprojects, based on collaboration, are available,e.g. the BP Andrew field development projectdescribed by Knott (1996). In 1997, a survey ofthe market for small and medium enterprises in



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the UK oil industry concluded that ‘Alliancingis here to stay and is broadly welcomed byoperators and contractors’ (Segal, Quince Wick-

Alliancing is here to stay andis broadly welcomed by

operators and contractors

steed Ltd, 1997). There was also a growing rec-ognition that the success of the relationshipsdepends on the beliefs and behaviours of thepeople involved rather than on what is writtenin the formal contract.

The low oil prices at the end of 1998 putfurther strain on the industry. Contractorswere faced with demands for more reductionsin costs, and it is noticeable that the industryno longer appears to emphasize the formationof alliances. Nevertheless, in 1999 an industry-wide study of supply chain management(CRINE Network, 1999) still concluded thatone of the issues which is ‘currently preventingsupply chains from operating effectively’ isthat ‘few long term strategies are in place forcollaboration between supply chain par-ticipants’. The study goes on to recommendthat ‘Customers should be prepared to investmore time in developing and maintainingrelationships with providers of strategic andcritical goods and services.’ Thus the industrystill appears to set much store on maintainingcollaborative relationships, and a new organ-ization ‘LOGIC’ was set up a the end of 1999‘to deliver a £1 billion improvement in per-formance in the North Sea . . . by getting betterat collaboration and co-operation’ (Oil and GasIndustry Task Force, 1999).

Characteristics of collaborativerelationships

Green (1997) describes some of the charac-teristics of collaborative working between cus-tomers (the oil companies) and theircontractors in the upstream oil and gas indus-try (see Box 1).

Success factorsMany authors have discussed factors thatencourage success in alliances and col-laborative relationships. Facilitators of theserelationships seem to agree that there is noformula that can be applied to guarantee asuccessful relationship. Each relationship is dif-ferent because it is made up of different peoplein a different environment. Cohen (1996) sug-gests that, ‘. . . the very notion of a formulacontradicts the type of creativity and inventionthat we have already seen is characteristic ofsuccessful alliances’. Nevertheless, thereappear to be some factors that can be viewedas necessary for success, even if they are notsufficient, and the following list is a distillationof these factors that are often mentioned in thecontext of alliances in the UK upstream oil andgas industry.

ž Commitment and example from seniormanagement. Senior management of all thecompanies involved in the relationshipmust believe in the value of the relation-ship and be prepared to do whatever isnecessary to ensure its success. Macbethand Ferguson (1994) suggest that ‘. . . thedevelopment of collaborative relationshipsoften requires a fundamental shift in atti-tude and behaviour, and the drive for thischange must come from the top down’.Spekman et al. (1996) add, ‘Successfulalliances . . . must have the blessing andsupport of senior management’.

ž Clear objectives, understood and acceptedby everyone. The objectives of the relation-ship need to be understood by everyoneinvolved, and they should be restated fre-quently. ‘All alliance participants mustunderstand why the alliance makes senseand how it fits into the larger set of goalsand objectives held by the firm’ (Spekmanet al., 1996).

ž Understanding where the ‘win win’ comesfrom. An essential feature of a collaborativerelationship is that it should represent apotential ‘win’ for all the companiesinvolved. It is very important that peopleare aware, and understand, how achieve-ment of shared objectives will generate the



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Box 1. Characteristics of collaborative relationships between oil companies andtheir contractors.

ž The relationship is for a long term (five years or more).

ž Contractors are selected more on the values, policies and behaviours of their peoplerather than on costs.

ž There is usually a single integrated team of people selected from the member companieson the basis of ‘best person for the job’.

ž A great deal of effort is put into building the joint team and helping them to build theirshared vision and objectives. External facilitators often play a major part in the team-building process and in helping the team to develop new ways of working to generateimproved performance.

ž There is much emphasis on the contribution to the end result by all the companies, ratherthan on a blinkered view of the activity of each company on its own.

ž There is emphasis on early involvement of all the groups who can influence the finaloutcome. For instance, it is now common practice to involve the fabrication companies,commissioning companies and the operations group at the design stage of a project.Changes at the design stage cost relatively little but can have large effects on the finaloutcome.

ž The aim is that all parties should benefit by collaborating and by concentrating onachievement of the end result. The customer gains by having his work completed atreduced cost, or in less time, and the contractor gains from increased percent profit.This ‘commercial alignment’ is often achieved through sharing of rewards for improvedperformance or penalties for reduced performance. ‘Risk-reward’ structures vary, asdescribed by Farrell (1995) or Gedik (1994), but many involve the sharing of savings orover-runs from some agreed target cost. There are often some minimum conditions ofsatisfaction which must be achieved by the project before contractors qualify for a shareof reduced costs, and a cap on the amount of cost over-run which contractors are expectedto share. Some attempts have been made to link receipt of rewards by contractors tosatisfactory performance of systems in the early years of their life.

‘win’ for their company. Such an under-standing will influence people’s behaviourwhen they deal with their colleagues fromthe other companies. Vollman and Cordon(1998) speak of ‘a focus on optimising thewhole of the (supply) chain—not benefitsto one partner achieved at the expense ofanother’ and ‘a clear distinction betweena focus on reducing costs . . . but not onreducing the margins of the partners’. Car-

lisle and Parker (1989) emphasize that fair-ness pays off in the longer term. ‘There isno long-term advantage to any customerin the chain from keeping their suppliermargins below a level which meets thesupplier’s investment/return needs’.

ž Stretch objectives. Alliances that appear tohave achieved extraordinary performancealso appear to have had very aggressive‘stretch objectives’ to aim at, which rep-



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resent a level of performance ‘beyond peo-ples’ wildest dreams’. Knott (1996) quotesthe BP Andrew Project Manager. ‘The keydifference was the setting of stretched tar-gets for Andrew—without these we wouldnot have achieved so much.’

ž Change of beliefs, attitudes and behav-iours. A change of attitude and behaviouris required by people at all levels, par-ticularly by senior and middle managers.Attitudes and behaviour spring from beliefsabout what is possible, openness to newideas and a willingness to try new coursesof action. Lamming (1993), when dis-cussing the ideas of lean supply, suggests,

. . . a fundamental shift in attitude isrequired . . . for customers the new atti-tude must remove the traditionalobsession with ownership of the pro-cess and short-term cost savingsthrough coercion.

Carlisle and Parker (1989) describe ‘lettinggo the rock’ as ‘letting go the old familiar,and no longer effective habits, to take upnew, unfamiliar, but survival-dependentways of managing . . .’.

ž No-blame culture. Exception that error onnon-achievement of objectives will lead toa search for a company or a person toblame tends to inhibit willingness to trynew courses of action or openness to newideas. Instead an emphasis on forgiveness,not blame, and on joint solution of prob-lems is to be encouraged. Spekman et al.(1996) describe how ‘Successful alliancesimplement blameless review processes . . .’.

Successful alliancesimplement blameless review

processess

Carlisle and Parker (1989) emphasize that

Supplier problems must be seen as jointresponsibilities . . . This requires that

resources . . . must be brought to bearon ‘our’ problems in a way which pro-duces the most efficient use of ‘our’resources.

ž Integrated team—no duplication of roles.The members of the team set up betweencollaborating companies should be chosenon the basis of ‘best person for the job’,rather than the company to which theybelong. It is also highly desirable that allthe members of the team are located in thesame office so that ‘face to face’ com-munication is very easy. Knott (1996)describes how, in the BP Andrew project,

Adversity, contractual conflict and a‘who’s to blame’ culture—the hall-marks of traditional working—werepronounced unwelcome. A single teamaligned to a common business goalwas advocated as an alternative thatcould deliver a satisfactory result. . . .The drive was to create a ‘total team’where everyone was valued equally,dispelling the ‘team and us’ viewpoint.

ž Frequent and open communication. Manywriters emphasize the role of com-munication in effective relationships.There should be no barriers to free flowof information. Anyone should be able toobtain the information they need for theirwork, quickly and without obstruction.Ellram and Eddis (1996) suggest that ‘opencommunication avoids misdirection andbolsters effective working relationships’and reports that ‘Poor communication (is)ranked as the most important cause of part-nering failure for both groups (buyers andsuppliers)’.

ž Training in collaboration and in developingnew ideas. People who are use to con-ventional relationships cannot beexpected immediately to change to col-laborative working. They will need help tounderstand what behaviours are requiredand to change some of the beliefs that con-strain their actions. Carlisle and Parker(1989) suggest, ‘There is ample history to



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indicate that such multidiscipline groups,once formed, are very tender organismsand require very special care and feedingto survive their infancy.’ Many successfulcollaborative relationships appear to usean external facilitator to assist with the pro-cesses of building shared objectives and ofdeveloping trusting relationships. Fac-ilitators can help team members to identifyand modify beliefs and behaviours that arebarriers to new ways of working. The con-tinuing involvement of a good facilitatorafter the initial phase can be a powerful aidto improved performance. Knott (1996)describes how, in the BP Andrew project,

External coaching and guidance werealsonecessarytoassist theteamtoexploreits potential, and to help individualsmaintain the stamina for continuouslysetting new targets. . . . a programme ofeducation was ongoing. . . . consultantsexperienced in assisting corporations toachieveperformancebreakthroughs,hadbeen engaged . . . to support the Andrewteam in its commitment to achieving anextraordinary result.

Has the industry’s view ofpartnering and alliancing changed?

Without longitudinal data from extensive sur-veys it is difficult to gauge how the industry’sthinking has changed over the years since ideasof collaborative working were introduced. Keyquestions arise such as: Is everyone’s interpret-ation of what is meant by partnering and alli-ancing the same? Are such ideas more widelyaccepted than they used to be? Have people’sviews of the critical success factors changedover the period? As yet, few academic papershave been published which relate specificallyto the UK’s upstream oil and gas industry, andmost literature that has emerged has comefrom practitioners.

Sources of data

One available source of data is the set of papersgiven at a series of commercial conferences on

‘partnering and alliancing in the oil industry’which have been run every year in Aberdeenand/or London since 1993. Even though theauthors of these papers may wish to presenttheir activities in the most favourable light, thepapers do give a valuable insight into theirview of the characteristics of a collaborativerelationship and of the critical success factors.

Fifteen conferences, for which proceedingsare to hand, have been identified and they offer139 papers by 119 speakers. Papers from sixof the conferences have been reviewed (twofrom 1993, and one from 1994, two from 1997and one from 1998) to investigate whether anychange in emphasis can be detected betweenthe start and end of the period. For ease ofreference, the 1993 and 1994 papers arereferred to as ‘early papers’, and those from1997 and 1998 as ‘late papers’. Seventy ninepapers were presented at the six conferences,and 63 of them were deemed to be relevant,in that the authors had an active involvementwith the industry and they provided infor-mation on the characteristics of collaborativerelationships, critical success factors, barriersto success or legal issues. The titles of the pap-ers reviewed are listed in Appendix 1.

Table 1 shows that contractors and con-sultants provided the majority of the papers inboth early and late periods but that more pap-ers came from customers in the later period.

Eleven of the early papers and 13 of the latepapers were based on case studies of projects,as listed in Table 2.

By inspection, 11 of the early papers and 24of the late papers were deemed to be basedon ‘hard experience’ of relationships that hadoccurred, as opposed to a description of futureintentions. Concerns about legal issues of col-laborative working, and about the effect ofEuropean procurement regulations appear in

Table 1. Author company types

Company type Early Late Totalpapers papers

Customer 7 14 21Contractor or consultant 22 20 42Total 29 34 63



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Table 2. Projects referenced

Project Early Latepapers papers

AGIP Aquila development (FPSO) 1Amerada Hess Scott development 1ARCO Trent and Tyne development 1BG Armada development 2BP Andrew Operational Alliance 1BP Dalmeny metering 1BP Forties Engineering 1BP Forties Well Construction Alliance 1BP Hyde platform 1BP Hyde Well construction 2Britannia pre-drilling 1Chevron Alba Development 1Conoco: Expansion of LOGGS terminal 1Elgin Processes, Utilities and 1

Quarters PlatformETAP facilities alliancez 1Mobil operations support group for 1

Beryl and SNS gasNAM Golden Opportunity Well 1

Construction AlliancePhillips Judy Joanne development 2Shell MMSC 1Texaco Erskine development 1Wandoo platform alliance 1No project 19 21Total 30 34

Note: one early paper referred to two projects

both early and late papers. There is slightly lessemphasis on European procurement regu-lations in the later papers, which may indicatethat the industry is now more comfortableworking with the regulations than it was in1993/94.

Three ‘anti-alliance’ papers emerge in thelater conferences, two of which concern a casestudy where extraordinary performance wasachieved by collaboration, but without thespecial efforts which normally appear to berequired to develop relationships and inte-grated teams, etc. (Shepherd, 1997, 1998). Thethird paper attacks long-term alliances as beingharmful to smaller companies and to thegrowth of innovation (D’Anocona, 1997).

Content analysis

The aim of the analysis was to extract the con-tent of the papers on:

ž characteristics of partnering and alliancing

ž critical success factors, or barriers to suc-cess

ž legal aspects

A series of ‘concepts’ were coded to eachpaper. The concepts were based on a pre-viously generated unpublished list of key state-ments about partnering and alliancing, andadditional concepts were created as the needarose. For ease of analysis, information on con-ferences, papers and the assigned conceptswas stored on a database. The concepts them-selves were categorized, to aid analysis. In all,239 concepts were used to capture the contentof the 63 papers, and 980 concept-paper com-binations were created.

The occurrence of the concepts in both theearly and late papers was counted, and 77 con-cepts were used more than three times. Table 3shows 29 concepts, sorted by category, whichoccur more than ten times.

These high scoring concepts reflect many ofthe ideas that would be expected from areview of the literature and which have beendiscussed earlier in this paper. Long termrelationships with shared objectives, inte-grated teams, change of beliefs, team building,the crucial role of management and the natureof the mutual benefit or ‘win-win’ are all ideaswhich appear in the literature.

Changes between early and late papers

To assess whether the views of the industryhave changed, the difference between thenumber of times each concept occurs in the‘early’ and ‘late’ papers has been calculated.The distribution of differences appears sym-metrical, with a mean difference of −0.18 anda standard deviation of 2.18. Eighty nine percent of the differences lie between −3 and +3.

On this basis, it can be suggested that themajority of the content is common to bothearly and late papers, and there has been littleevolution of the industry’s thinking.

To detect some signs of evolution in think-ing, the concepts with fairly large differences(more than two standard deviations from themean) in occurrence between early and latepapers were examined.



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Table 3. Concepts occurring ten or more times

Category Concept Count

General Shared visions and objectives 37Relationships tend to be for a long term 14A short document describes the relationship, the desired behaviours and the risk 10

reward structuresTeams Integrated teams 27

Creating effective teams 17Team-building activities 16Beliefs, attitude and behaviour underpin the relationships and high performance 14People must change their beliefs—leads to changed behaviour 13Involve ALL the groups which can influence the outcome 14Open communications, at all levels, with no hidden agendas 27High levels of trust 23There is commitment to each other’s success 11Duplication of roles and work is eliminated 11It is important that changed roles, responsibilities, and accountabilities are clearly 11

defined and understood‘Stretch targets’ lead to extraordinary performance 11Team member must understand the needs of the other companies and 10

team membersIn selecting partners, attitudes and behaviours are more important than tendered 10

costsManagement Senior management must provide the drive 21

Senior management plays a crucial role 12Steering group made up of senior managers from the member companies 12

Performance Agreed performance measures are required 19An environment of continuous improvement 17

Win-win Risk reward structure enables commercial alignment 19Customer and contractors share gains from improved performance, but also share 14

the losses if things go wrongContractors’ profits can depend on savings made from an agreed target or from 13

achievement of a range of performance metricsAll companies in a collaborative relationship must feel happy with the relationship 13

and with the outcomesCustomers gain access to the contractors’ experience and expertise 13Contractors gain long term security of work 11Customers gain reduced total cost of the job 10

Table 4 shows concepts that occur moreoften in later papers and which could be clai-med to arise from experience of managingactual relationships. Thus experiencereinforces the view that there is no formulawhich guarantees success, but that even in acollaborative relationship it is still necessary tohave good systems and procedures to ensure

In a collaborativerelationship it is still

necessary to have goodsystems and procedures

that appropriate tasks are completed. Theimportance of the customer being part of therelationship rather than keeping the con-tractors at arms-length is given more emphasisin later papers, together with the idea of a shortalliance agreement for governing a col-laborative relationship. The idea that a risk-reward structure increases commercial align-ment between companies also features morestrongly. When considering issues which affectthe performance of teams, the importance ofclear understanding of roles and responsi-bilities is mentioned more often in later paperstogether with the usefulness of stretch targetsfor motivating performance, and the importantrole of facilitators.

Table 5 presents the concepts that occur



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Table 4. Concepts which occur significantly more often in later papers

Category Description Early Late Difference

Collaboration There is no general recipe for ensuring success of collaborative 1 5 4relationships

Collaborative relationships still need systems and procedures 1 5 4to enable the teams to work

Contract Collaborative relationships tend to be tied together by a short 2 8 6document which describes the relationship, the desiredbehaviours and the risk reward structures

Customer It is important that the customer is part of the collaborative 5 5relationship with the contractors

Risk reward The win-win or commercial alignment is enabled by the risk 6 13 7structure reward structure sometimes called ‘gainshare’Structure It is important that changed roles, responsibilities, and 3 8 5

accountabilities are clearly defined and understoodTargets If team members are committed to a stretch target (which they 3 8 5

previously would not have believed possible) they are morelikely to achieve extraordinary performance even if they donotachieve the stretch target

Team A facilitator plays a crucial role in managing change, building 2 7 5effective teams, building shared objectives and helpingpeople believe that extraordinary performance is possible

A facilitator helps the teamwork together to build shared visions 2 6 4and objectives

Table 5. Concepts which appear significantly more often in early papers

Category Description Early Late Difference

Beliefs It is important that each team member understands the need of 8 2 −6the other companies and team members

Collaboration Collaborative relationships have open communications with no 17 10 −7hidden agendas

In a collaborative relationship there is open and free 8 2 −6communication at all levels

In a collaborative relationship, there is commitment to each 8 3 −5other’s success

In a collaborative relationship there can be high levels of trust 14 9 −5In collaborative relationships problems are owned and solved 6 1 −5

jointlyPerformance Part of the process of building extraordinary performance 7 2 −5

involves challenging existing custom and practiceIt is important that ways of measuring performance are agreed 12 7 −5

and put in placeRisk reward Contractors should be expected to accept risks only if they 5 −5structure have some influence over the outcomeWin-win All companies in a collaborative relationship must feel happy 10 3 −7

with the relationship and with the outcomes—a ‘win-win’relationship

A prize offered by collaborative relationships to contractors is 9 2 −7long term security of work

A prize offered by collaborative relationships to contractors is 7 1 −6maintained or increased profit margins (even though thevolume of work on one job may decrease)



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more often in earlier papers. Issues such asunderstanding of the needs of others, com-mitment to the success of others, open com-munication, joint solution of problems, theexistence of trust and the nature of win-winrelationships are all given more emphasis inearly papers than in later ones. It could beargued that these are perhaps more theoreticalaspects, which might be taken for grantedonce a successful relationship has been estab-lished. Surprisingly, the need for methods ofassessing performance and for challengingexisting practices seem to be more evident inthe early papers than in later ones.

Conclusions

This study has considered the development ofcollaborative relationships between operatingcompanies and their prime contractors in theUK’s upstream oil and gas industry. Somecharacteristics of collaborative working andfactors necessary for success have beenreviewed.

From this study it is clear that the ideas ofcollaboration are widely recognized andaccepted throughout the industry, especiallybetween oil companies and their prime con-tractors. Over the years since 1992, partneringand alliancing have become an accepted wayof working and they are no longer regarded asnovel.

The content of 63 conference papers, pre-sented by practitioners in the field, has beenanalysed to assess whether the industry’s think-ing has changed from 1993 to 1998. The con-cepts used most frequently by the authorsreflect many of the findings from academicliterature.

Surprisingly, there appears to be no out-standing difference in the frequencies of occur-rence of concepts between early and laterpapers, and this suggests that thinking has notchanged greatly over the period studied. Thereis, however, some indication that experience-based ideas are given more emphasis in laterpapers. For example, the absence of a formulawhich guarantees success; the importance ofthe customer being part of the relationship;

the role of the risk/reward structure in creatingcommercial alignment; and the importance ofgood systems and procedures. A number ofthe more theoretical issues appear to be lessemphasized in later papers, e.g. understandingthe needs of others; being committed to thesuccess of others; the need for open com-munication at all levels; trust; joint solution ofproblems; and challenging existing custom andpractice.

The underlying principles of collaborativeworking and the factors necessary for successhave not changed since 1993. The analysisshows that the authors of the early papers wereaware of these principles and factors. The laterpapers show that the hard experience gainedsince 1993 has served to reinforce the aware-ness and understanding, even though therehave been slight changes of emphasis.

The fall in oil prices at the end of 1998appears to have placed strains on relationships,as operators required further cost reductionsfrom their contractors. It seems that terms suchas alliancing or partnering are used less oftennow. However, ideas of collaboration acrossthe supply chain are still being emphasised bythe industry.

Biographical notes

Dr Richard Green is a Research Fellow in Rob-ert Gordon University’s Offshore ManagementCentre. His main research area concerns therelationships between North Sea oil companiesand their contractors. Before joining RobertGordon University, he worked for British Pet-roleum in London, Iran and Aberdeen.

Professor William Keogh holds the BriscoChair in Entrepreneurial Studies in Robert Gor-don University’s Centre for Entrepreneurshipand SMEs. His main research areas are inno-vation, entrepreneurship, total quality man-agement and operations management in smallcompanies. Before joining Robert Gordon Uni-versity, Professor Keogh lectured in Oper-ations Management at the University ofAberdeen and Management Science at the Uni-versity of Stirling.



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Appendix 1

Papers by conference

Conference title Date Location OrganizerPartnering and Closer Working Relationships 05-July-93 London IIR

Author Company Title of paperDrummong B Wood Group Analyse the problems of change in organisational

structure, culture and working practices inpartnering

Foreman P Trafalgar House The EC procurement directive and its potentialimpact on partnering arrangements

Hazlett K and Johnston J BP Exploration Partnering in the Forties OilfieldHill T AMEC Offshore The practicalities of partnering in maintenance,

developments, modification and servicecontracts

McCallum J Global Marine Drilling Managing the move to partnering from thesubcontractor’s point of view

Miskin C Sonat Offshore Drilling Building trust between client, contractor and sub-contractor to improve productivity

Murphy D Kvaemer H&G Partnering in practice—clarifying the concept andanalysing the potential of strategic alliances

Rhodes C and Finch D BP Exploration Partnering—developing closer workingrelationships to add value to offshore operations

Warrack R Smedvig Ltd Rethinking your business strategy as a potentialpartner rather than as a contractor

Conference title Date Location OrganiserPartnering and Closer Working Relationships 07-Dec-93 Aberdeen IIR

Author Company Title of paperAikens T PA Consulting Refining your performance measures to ensure that

partnering is really saving you moneyForeman P Trafalgar House Obtaining a balance of liability, responsibility and

reward to ensure maximum commitment fromall partners

Gowers E Bechtel Designing flexible contracts to express newpartnering agreements in legal terms

Gray K and Mackay Chevron UK Achieving the benefit of team working—Chevron’s five million pound saving on the Albajacket

Kirton P Baker Hughes Inteq Restructuring your organisation from the top downto facilitate the move into partnering

McEwan A and Hogg S Conoco UK Making effective use of the client/contractorintegrated team principle to maximise time andcost savings whilst improving quality and safety

McKersie A British Gas Demystifying the EC procurement directive and itsimpact on potential partnering arrangements

Murphy D Kvaemer H&G Focusing on the importance of culture change togain maximum benefit from partneringrelationships

Roxborough Clifford Chance Avoiding infringement ofprocurement/competition law in partneringagreements and consortia bidding

Shaw P Amerada Hess Contractor selection—evaluating potentialpartners to ensure their compatibility andcapacity to provide high quality within budgetand time targets



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Conference title Date Location OrganiserProven Partnering and Contracting Strategies 25-Oct-94 Aberdeen IIR

Author Company Title of paperBallard S Baker Hughes Inteq Fine tuning your organisation to ensure successful

partneringBehounek M and Dodds N Sperry-Sun Drilling Services The vital role of benchmarking in measuring and

improving the performance of the partnershipBlackmore L and Allison BP Engineering Successful partnering from the sub-contractor’s

point of viewCarr J Noble Drilling Setting up a win-win partnership contract—

getting it right first timeForeman P Trafalgar House Clarifying the legal aspects and pitfalls to be aware

of when entering closer contractualrelationships

Gedik A Wood Group Setting effective performance measures that willprove that partnering is saving you money andimproving performance

Jones N Hunting Oilfield Services Making effective use of integratedclient/contractor teams to maximise time andcost savings whilst improving quality and safety

Rushmore P Rushmore Associates Gaining maximum commitment from all partnersto ensure that everybody is working towards thesame goals

Rustam S AMEC Process and Energy Assessing the benefits and pitfalls of the differentcontracting strategies to determine which isright for you

Waddell J and Mason P Kvaemer H&G Offshore Closer working relationships in the future—ourvision of partnering and contracting strategiesand what to expect from your partner

Conference title Date Location OrganiserAlliances in Oil and Gas 22-Apr-97 Aberdeen IQPC

Author Company Title of paperBakker T Wells Engineering Ltd Selecting the right alliance: EG and IQ in partnering

relationshipsCarlisle J John Carlisle Partnerships Evaluating the all important culture of trustD’Ancona J Balmoral Group Small medium enterprises—the impact of alliances

and partnering on SMEsGibson F Texaco UK Erskine Field—selecting then building the right

allianceMiller C Shell Expro Alliances contract strategy—a risk or benefitMitchell D Brown and Root The Wandoo allianceMorgan D Conoco Deciding when alliances are appropriatePatten R and Swaine R Brown and Root Tendering and winningRennie A AMEC Process and Energy Beyond partnering and alliancingSannes J Statoil UK Building successful alliances overseasScott A British Gas Amada field: a new management philosophyScott B BP Exploration Alliances just another buzzword or a true departure

from traditional practices

Conference title Date Location OrganiserPartnering and Alliancing ’97 22-Oct-97 Aberdeen IIR

Author Company Title of paperBuchan R BP Exploration Successful operational alliancing—a case study

from BP AndrewCarlisle J John Carlisle Partnership Key steps to successfully changing behaviour to

establish a sound foundation on which to build‘relatedness’ across the alliance team

Cerrito E AGIP Successfully developing an FPSO technologicalalliance: Aquila Field Case Study

Giles B Kvaerner Oil and Gas Identifying the critical factors that make an alliancesucceed or fail



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Karevold KI The Organisation Development Key factors in identifying and selecting allianceAssociation partners

Karlsen E The Organisation Development Developing an alliance model as a tool forAlliance structured analysis of alliances

Kassen K University of Oslo, Institute of Legal aspects of alliancing: the parties’ needs,Maritime Law opportunities and constraints—and the

resulting contract structureMcLennan K Wood Group Engineering How can you tell if you are doing a good job?

Implementing a performance measurementprogramme which enables you to measure thesuccess and target areas for improvement in thealliance

Neffgen J Global Marine Integrated Determining the best approach to developing aServices tailor-made contract strategy and framework for

the allianceShepherd C Phillips Petroleum Judy/Joanne ‘Non Alliance’ Alliance case study:

Achieving the benefits and philosophies ofalliancing without risk and reward sharing

Conference title Date Location OrganiserAlliancing and Contracting in the Oil and Gas 21-Jan-98 Aberdeen LIBL

Industry

Author Company Title of paperBeggs D Denton Hall The legal issues involving partnering and alliancing

in the oil and gas industryBrooks K ARCO British Can the value of long term contractor supplier

relationships be maintained?Brown N Wood Group The impact of CRINE produced contracts on

partnership alliances in the oil and gas industryChocqueel-Mangan J Renaissance Solutions Implementing a performance strategy and

measuring the success of an alliance againstcorporate objectives

Davies J and Nelson S Elf Expro The Elgin PUQ AllianceForeman P Kvaemer Oil and Gas Implementing cultural change during an alliance

contractHigham R AMEC Process and Energy The alliance between Mobil and AMECJames D and Murray S British Gas Setting up an operations alliance—The Armada

ProjectLeiper A Britannia Operator Ltd Alliancing and team alignment in a high

performance development drilling operationMemory H Hendron Consultancy Developing channels of communication between

partnersPhillips I Halliburton The commercial basis underpinning alliancingShepherd C Phillips Petroleum A non-alliance alliance—Judy & Joanne. Alliancing

is a state of mind not a piece of paper

Five years of collaboration in the UK upstream oil and gas industry

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