How to manage bribery and corruption risks in an oil and gas company?

bribery corruption risks

Bribery and corruption risks are becoming an increasing concern for businesses, and company executives and firms operating in the oil and gas sector. As the commercial and operational risk profiles of companies change, consideration needs to be given to the identification and management of bribery and corruption risk.

So, how to manage bribery and corruption in an O&G company?

A research study shows many large corporations have not put in place basic safeguards to protect themselves from commercial and reputational risks associated with their suppliers. One third of oil and gas firms do not have an anti-bribery and corruption policy for their main suppliers, and one in 10 do not have a health and safety policy for their main contractors. In addition, when suppliers do provide information, large oil and gas firms admitted that they are not validating the details, or auditing suppliers on site to check whether they are adhering to their own policies. A third of the sampled oil and gas buyers admitted that they do not carry out basic checks – such as internet research or making telephone calls – to validate suppliers’ information relating to anti-bribery and corruption or financial reports. One in five companies does not check health and safety documents. Further, many oil, and gas companies did not conduct any visits to supplier sites to check whether contractors were operating in accordance with statements made in their health and safety, anti-bribery and corruption and financial documents.

Steps oil and gas company can use successfully to respond to bribery and corruption risks

Companies in the oil and gas sector need to address their corruption risks proactively by implementing an effective anti-corruption compliance program.

Conduct an effective risk assessment program: A thorough risk assessment process puts a company in a position to demonstrate that it used due care in assessing its risk, should unforeseen issues arise. The corruption risk assessment should focus on actual risks posed by the nature of a company’s operations, the degree of business with governmental entities, the countries where it does business, the regulatory environment, and other factors.

Develop and implement corporate anti-corruption policy: The global nature and scale of the oil and gas sector, and the complexity of the working and contractual relationships with governments, venture partners, suppliers and other contractors, make compliance with anti-bribery and anti-corruption regulation something that requires significant management focus.

Implement anti- corruption financial controls: Good controllership is the first line of defence against corrupt payments and limits the number of opportunities for fraud, bribery and corruption to occur. Reconciling bank accounts monthly is a key cash control that also protects against misappropriation and possible off-books payments.

Conduct anti-corruption compliance audits: Conduct anti-corruption compliance audits to test for substantive compliance by seeking to identify potential violations or red flags. Audits also often uncover new risks not previously seen or fully appreciated. In this way, they act as part of an ongoing corruption risk assessment process.

Re-assess risk and modify program: Comprehensive corruption risk assessments should be conducted periodically, to make sure that the anti-corruption program is evolving to meet new risks posed by the changing business and regulatory environment. If the business changes significantly, such a process should be accelerated.

Solely having a compliance program in place may not eliminate risk completely, whereas companies should implement compliance programs and policies that effectively address bribery laws. It’s important for companies to monitor their dealings with government officials, and provide comprehensive FCPA training and guidance regarding the applicable laws and regulations of those countries in which the company operates. Oil and gas companies should also be keenly aware of risks associated with business partners particularly because of the high-risk jurisdictions in which they operate. Companies should conduct due diligence on joint-venture and other business partners. As part of this process, it’s important to make sure that business partners are compliant with the company’s own policies and have controls in place to account for the FCPA and other anti-corruption laws. As part of a rigorous risk assessment, it’s important for companies to perform detailed reviews of the consultants, distributors, and sub-contractors with whom they work. Companies should also establish ongoing third-party controls and monitoring.

By virtue of where they operate and those parties with whom they frequently interact, oil and gas companies will continue to face heightened exposure to bribery risk in the foreseeable future. Therefore, companies are well advised to build defendable and holistic anti-bribery compliance programs.

How Insight Consultants can help

Insight Consultants use technology solutions to many of the emerging Oil& Gas Industry challenges. We address emerging business challenges by aligning people with processes and driving operational excellence with technology solutions. We offer visibility across the enterprise and supply chain so that your personnel can access accurate data, collaborate, and take timely and informed decisions.   We have expertise in designing reporting system for better accountability, enterprise collaboration solutions, optimising operational inefficiencies using technology, architecting real-time enterprise etc. We help clients to penetrate new markets seamlessly to increase business growth, drive supply chain visibility and optimise asset management to lower costs, assist in royalty management calculations, leverage analytics, mobile and cloud to become a digital enterprise.

How digitization can improve Oil & Gas efficiency?

digitizing O&G field

Despite record oil prices and increasing demand for crude, the oil and gas industry will be inhibited in reaching its full potential for value creation unless it can solve its dilemmas regarding human capital and resources. Closing the labor and skills gaps represents one of the industry’s major factor in sustaining growth and maximizing profitability against a tide of rising capital and operating costs. Adapting to this new normal in market fundamentals, companies are taking a hard look at their operating models and asking themselves how they can change to survive.

The fundamental driver is simple, leveraging the power of digital technology to transform business operations can deliver real, sustained value to the bottom line. ‘Going Digital’ becoming increasingly necessary as costs are forced downwards and the labour force shrinks, whilst efficiency and production need to rise. So, let’s see how digitizing the O&G gas field can improve its efficiency.

What is a Digital Oil Field (DOF) concept and how is it built?

Digital oil field is the umbrella term for technology-centric solutions that allow companies to leverage limited resources. Generally, the digital oil field encompasses both the tools and the processes surrounding data and information management across the entire suite of upstream activities. More specifically, digital oil field technologies allow companies to capture more data, with greater frequency, from all parts of the oil and gas value chain and analyse it in real or near-real time. It basically focuses on leveraging the benefits of modern IT, automation, and communications to enhance all the conventional aspects of oil and gas operations, from exploration and production to environmental monitoring and safety.

With true digital transformation, opportunities are created to connect disparate operations across organizations, creating a tipping point and delivering real value for the investment. Technological innovation has been a prime driver behind the move in the development of the digital oil field, but it can workproperly only when automated operations are streamlined with new personnel work processes, and a vital component of their success is ensuring that people understand the concept and process, and are well trained and fully committed.

How to set up a DOF?

  • Get Connected: Start by connecting critical assets and machines. Connecting operational data to each other and the people who need it are crucial to begin your journey.
  • Get Insights: Use intuitive methods to analyze data to determine true root cause and opportunities to improve or resolve. You have enhanced ability to quickly evaluate anomalies and take the correct action.
  • Get Optimized: Leverage digital to optimize the total lifetime performance of your assets to increase availability, minimize costs, and reduce operational risks.

Impact of digital technology in the oil and gas sector

Going digital is the right approach to overcome the many challenges faced by the Oil and gas industry today. Over the past five years Digital Oil field has become a reality. The industry has been forced to respond to the downturn in commodity prices by embracing digitization as a means for cost-cutting

Digital improvements have truly helped the industry in multiple ways like:

  • Production Optimization: Production can be optimized at lower cost with improved interconnection between data sources and physical locations to drive better, fact-based decisions
  • Analytics capability: Companies with better analytics can stand top in their financial performance. Analytics excellence will help to improve production
  • Predictive maintenance and repair: Tracking devices on inventory and asset management applications can connect tool delivery and management to preventive maintenance schedules.
  • Planning and execution: Digital toolsets such as process collaboration and analytics can enable cross-functional understanding and collaborative decision-making based on total situational knowledge. Can take decisions faster than industry colleagues. Faster execution of decisions as planned
  • Digital finance transformation: Digital solutions can combine mobile, cloud and interfaces to finance systems to achieve live automation of invoicing in the field. Real-time views of back office activities and expenditures can increase accuracy and timeliness in billing releasing work capital.

For operators struggling to maximize profitability, especially those tapping costly and risk-intensive deep-water wells, the upfront cost of investing in modern information technologies is becoming an increasingly worthwhile trade-off for safer, more efficient, better-managed operations.

How Insight Consultants can help you to go digital?

Insight Consultants use technology solutions to many of the emerging Oil& Gas Industry challenges. We address emerging business challenges by aligning people with processes and driving operational excellence with technology solutions. We offer visibility across the enterprise and supply chain so that your personnel can access accurate data, collaborate, and take timely and informed decisions.   We have expertise in designing reporting system for better accountability, enterprise collaboration solutions, optimizing operational efficiencies using technology, catalogue your existing digital spend and assets, architecting real-time enterprise etc. We look at a client’s business problems in a systematic manner that eventually gives both, Insight Consultants and the client, a clear view of what’s required and why, what needs to be done about it, and how its impact on your organization can be measured for success. We help you get a sense of your business, through Radical Rooting, our home-grown approach to help businesses place premium on the future value of a solution or idea before counting costs.

We help clients to penetrate new markets seamlessly to increase business growth, drive supply chain visibility and optimize asset management to lower costs, assist in royalty management calculations, leverage analytics, mobile and cloud to become a digital enterprise.

We can help you make  your O&G enterprises steer ahead of competition by adopting emerging technologies to digitize their entire value chain. Feel free to reach us.

Automation in Oil and Gas : Innovations and benefits

automation oil gas

In a dynamic global industry like oil and gas, you need to manage costs, extract the most value possible from current assets and maximize up-time. Technology available today makes it possible to develop a truly connected enterprise and move closer to operational excellence.  Automation is a major driver in oil and gas industry today.  Digitization, automation and new technologies give operators and technicians immediate access to important performance, condition and technical information. Having this kind of critical data at your fingertips speeds up decision-making, troubleshooting, and performance efficiency.

Energy companies often face challenges transitioning to more renewable sources. To meet the demand in the diverse situations, energy companies need to focus on innovative technologies within their business models where they can embrace innovation to increase efficiency. Process Automation is one such technology that energy companies can depend. Modernizing internal processes with automation, along with better access to information about operations and maintenance, will help the industry streamline production and distribution and allow for a higher yield.

Automation in Oil and Gas : Areas of influence

Drilling Operations:  Drilling is one major area where automation can make positive impacts.  Drilling is not just the largest expensive process in the energy industry, but it involves considerable safety risks for the workers involved. Automating manual portions of that process, like pipe handling and pressure drilling, can significantly reduce safety risks, and speed up the overall drilling process.

Diagnostics and Inspections: Many instances the mining fields will be in remote areas and easy human access will not be possible. In such instances unmanned drones or submersible can  help  monitor and  aid inspection process. These vehicles can be controlled remotely, eliminating the need for skilled pilots, and can even broadcast live video feeds and data back to a central location.

Monitoring of pipelines: With increased cases of criminals attempting to steal pipelines, the need for a monitoring system is of great demand. Here automation is a perfect fit. With the use of autonomous underwater vehicles and unmanned vehicles it is possible to detect attacks and vulnerabilities.

Weather Monitoring Systems: Some energy companies have begun using automated weather sensors to detect changes in seismic activity, as well as ocean and atmospheric levels. This can help predict when conditions are right for major natural weather events, such as earthquakes and hurricanes, thereby enabling oil and gas companies to take the proper safety precautions in real-time.

Pressure and Flow: The measurement of pressure and flow of oil is a task that can easily be improved through automation. Installing smart sensors which connect to centralized monitoring software, allow pressure, flow, and level of oil to be reported remotely from the field, without the need for on-site crew. Upon receiving this information, rig crews can monitor and adjust settings as needed.

The automation market is in high demand in the oil & gas  industry, from providing individual control equipment to integrated control systems with multi-functionality capabilities. Recent trends reveals, O&G companies are have been collaborating with solution providers to understand how IoT technology can help them thrive in a low-price oil environment in addition to using advanced control systems. Major automation vendors have launched their own IoT platforms, which focus on providing services such as cloud services, predictive analytics, remote monitoring, Big Data analytics, and cybersecurity, which is of paramount importance in this industry. Increased productivity, reduced operational and maintenance costs, increased profitability, increased efficiency, and improved plant optimization are the common benefits realized by customers who use IoT platforms for their plant operations.

Insight Consultants use technology solutions to many of the emerging Oil & Gas Industry challenges. We address emerging business challenges by aligning people with processes and driving operational excellence with technology solutions. We help clients to penetrate new markets seamlessly to increase business growth, drive supply chain visibility and optimize asset management to lower cost, assist in royalty management calculations, leverage analytics, mobile and cloud to become a digital enterprise.

Supply Chain Management capabilities for Oil &Gas

The oil and gas industry is involved in a global supply-chain that includes domestic and international transportation, ordering inventory visibility and control, materials handling, import/export facilitation, and information technology. Within each stage there are many operations. Any ineffective process in any of these stages can lead to work productivity issues, wasted money and lower production levels and profits. But in many cases each company in this cycle is likely to act in its best interests to optimise its profit. Lack of standardisation in the supplier selection process, insufficient collaboration between buyers and suppliers, and rising labour cost ultimately end up in big losses.

Supply chain (SC) is a dynamic process that entails a continuous flow of information, materials and funds across multiple functional areas, within and between chain members in order to meet customer’s requirements and to maximise their profit. Such dynamic process requires instantaneous acquisition and constant re-evaluation of partners, technologies and organisational structures. However, firms may encounter problems related to the dynamic process.

An innovative approach to supply chain management can position your organisation for success. What do you think, Is your supply chain positioned for success?  Energy companies need to find innovative solutions to maintain success in the highly competitive energy sector.

  1. Plan a clear strategy: Understand key issues impacting an organisation’s ability to operate cost effectively. Create a flexible model to pivot when and where the market requires.
  2. Explore new horizons: Leverage analytics and cloud technologies to see opportunities sooner and predict new opportunities.
  3. Digitise your network: Understand how to connect your supply chain is crucial in driving maximum value
  4. Reduce Cost: Create the cost structure to efficiently serve the customers.

Insight Consultants use technology solutions to many of the emerging Oil& Gas Industry challenges. We address emerging business challenges by aligning people with processes and driving operational excellence with technology solutions. We can assist you in:

  • #Demand forecasting, including probabilistic approaches to forecasting and scenario analysis
  • #Inventory management and systems for tracking inventory held by other players in the procurement chain
  • #Logistics and distribution management where the objective is not only to optimise costs and minimise stock-outs but also to measure value creation for end users
  • #Supplier viability and customer credit assessment
  • #Sales, operations, and supply chain planning
  • #Order-to-cash management

We offer visibility across the enterprise and supply chain so that your personnel can access accurate data, collaborate, and take timely and informed decisions.   We have expertise in designing reporting system for better accountability, enterprise collaboration solutions, optimising operational inefficiencies using technology, architecting real-time enterprise etc. We help clients to penetrate new markets seamlessly to increase business growth, drive supply chain visibility and optimise asset management to lower costs, assist in royalty management calculations, leverage analytics, mobile and cloud to become a digital enterprise.

 Contact Us to know how we can assist you in creating  a flexible and responsive supply chain that is critical to sensing and responding to customer demand.