Partnering and Alliances: Theory and Practice

Abstract

Abstract This paper outlines some of the theories associated with the development of collaborative relationships (partnering and alliances) between companies which have shared objectives. It then reviews research carried out at The Robert Gordon University on relationships between operators and their contractors in the United Kingdom Continental Shelf (UKCS) Oil and Gas Production Industry. Basic data has been collected on 175 relationship and more detailed data has been obtained on about 20 relationships by interviewing the people involved. There is a wide variety of relationships in place in the industry and they are at differing stages of development. Views on the benefits and practicality of collaboration vary across the industry. By and large, comments received from the people involved in creating and managing collaborative relationships confirm the messages arising from the theory. The importance of behaviour and attitudes of the people involved at all levels is emphasised. There is uncertainty and concern among the smaller contracting companies about how the market is evolving and how to react to it. Current theory does not appear to provide much assistance with this problem. There is also concern that the current developments can lead to a stifling of innovation among the smaller companies. The paper summarises the comments received on this subject. Introduction This paper is based on research at Robert Gordon University on collaborative relationships (partnering and alliances) between oil and gas operating companies (operators) and the contracting companies (contractors) which supply the goods and services needed in the development and operation of oil and gas fields in the UKCS. The principle of collaborative working between companies across the supply chain has been recognised for many years. This style of working (now known as "lean supply") is well established in the car and consumer electronics industries (Ref. 1). In these industries, production lines assembling thousands of finished articles are fed by supply chains delivering millions of components. In contrast, collaborative working in the UKCS Oil and Gas industry (the industry) has been recognised only since 1990 when the terms "partnering", "alliance", "win-win relationship" started to be used. However, it is apparent that the smaller operators have had close and collaborative relationships with their contractors for many years even though they were not labelled as partnering or alliance. The oil and gas industry differs also from the car or electronics industry because the emphasis of collaborative relationships is more on the supply of services than goods. The main force driving the operators to build collaborative relationships with their contractors is the need to reduce costs of developing and operating their fields. If the industry can reduce its costs substantially then lives of existing fields can be extended, return on investments in the UKCS will remain attractive and new fields will continue to be developed. (Ref. 2). The message of cost reduction and collaborative working has been reinforced by the Cost Reduction Initiative for the New Era (CRINE) involving operators, contractors and government. (Ref. 3) The initial phase of research at Robert Gordon University has concentrated on establishing the nature and extent of collaborative relationships in the UKCS oil and gas industry, and on collecting views of people involved on the benefits, drawbacks and lessons learned from collaborative working. Coverage of the industry is not complete but many interesting messages are emerging from the work so far. The paper will review some theoretical views of collaborative relationships and then some of the UKCS industry practice, as revealed by research, will be described.