Oil prices have settled back to between US $60 and US $70 but there is a new challenge bubbling up. David Smith, of newly-arrived Celerant Consulting (Celerant) tells Capital Letter that cost management is no longer the principal issue for the sector.

Henry Wheeler Shaw told his nineteenth century audience: “advice is like castor oil, easy to give, but dreadful to take.” True. Almost. But probably not where the crude oil industry is concerned, and in particular in the aftermath of the past twelve rather volatile months.

David Smith is new in town. After 17 years at Celerant’s global headquarters in London, where he headed the energy practice, he has moved to the UAE to run the firm’s ADNOC and Occidental Petroleum Corporation accounts, among others. Celerant’s Abu Dhabi office opened in April, establishing a permanent company presence in the Gulf for the first time.

“We’re about implementation,” Smith tells us. “Some of the companies over here have used strategy consultants to provide ideas for operational excellence but the client doesn’t always know how to actually implement these ideas. The client is left with an enormous document and a hefty bill and consulting is left with a bad name because there is no actual measurable benefit from the advice.” This is where Wheeler Shaw was right.

“It’s not just about having the know-how, Smith continues “in most cases, companies don’t have ‘change’ departments and people are kept busy enough doing their day-job. You need to have a proper team running a programme for change, and , if you don’t have that internally, you need to bring it in.”

That makes sense to us, but what about leaving clients high and dry after the project? “We always insist on our team being matched one-for-one by internal employees. This ensures a bigger buy-in to the change programme and trains staff in what we are doing. It is also an important part of up-skilling the local workforce and passing on our expertise to them.”

Like any other commercial venture, oil companies need to produce cash. Capital Letter readers are experts in the many routes to achieving this, but, as Smith points out: “when oil was at US $147 in the middle of last year the sector was less concerned about cost than it was at US $32.” At current prices, the pressure is off cost a little but volatility ensures its place on the watch list. What, then, should oil companies be preparing for if they are to thrive and grow? This is where Wheeler Shaw was possibly not right.

“We don’t take on 22-year-old MBAs”, Celerant’s CEO and Founder Ian Clarkson is on record as saying. Smith adds: “It’s all about the implementation. Celerant works alongside our clients to analyse and decide what needs to be done to achieve measurable performance improvement and then we partner with the client and implement it, committing ourselves to the result.” We can see we have struck on something here.

“With our oil clients, Celerant puts people on the platforms to help bring about the change required” Smith enthuses. Isn’t that what anyone else would do though, we ask? “Probably, but our teams stay on the platforms for months at a time. They live the shifts like everyone else. I can think of a number of consultants who would hate to work for us!” He continues: “It’s important for our teams to understand the client’s workplace properly and to gain the respect of the people whose jobs they are changing. It’s also good for our teams to get closer to the action.”

And it is through this partnering, or Closework™ as Celerant calls it, that the firm has been able to gain a valuable insight into the longer-term issues for business. Like musical chairs, the very restoration of the pricing issue has extracted a greater concern for the sector: skills shortage.

“The recent price hike will bring about a real shortage in skills” explains Smith. “Stabilisation of the oil price has brought about a resurgence in infrastructure initiatives but who’s going to carry out the work? This needs to be addressed sooner rather than later.”

Celerant’s work in Abu Dhabi and Oman has attracted interest from national oil companies elsewhere in the Gulf, although Smith is discreet about recent contract wins. In his Edinburgh hushed tones, he points out: “I’d need to check with them first before telling you.” This man was made to advise. One wonders where his next dose of castor oil will be administered.