Oil-Services Providers Ponder How to Survive Energy Bust

When oil-service providers met at the Offshore Technology Conference in Houston during the recent boom in energy, they were used to calling the shots. Now, caught between high operating costs and clients bent on reducing their own expenses, they’re exploring strategies to survive the current economic crunch.

“All of us are starting to see an impact,” said Thierry Pilenko, chief executive of oil-services provider Technip (TEC.FR), citing a downturn in services dedicated to petrochemical projects, onshore drilling and even deepwater activities.

Oil-service providers must find ways to lower costs by making changes to their own supply chains — including profiting from cheaper materials and establishing new relationships with suppliers in Asian countries, Pilenko told attendants of the OTC conference. These companies must strive above all to avoid the mass layoffs that crippled the industry in past oil busts, he said.

But the downturn also presents an opportunity to do better engineering and increase operational efficiency. During the boom, “there was a need to go fast to bring the resources as quickly as possible,” Pilenko said. “This is the opportunity today to look at simplification.”

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