Woodside Petroleum outlines actions it is taking to sharpen competitive edge as competing LNG supplies continue to rapidly emerge
By Anna Game-Lopata | August 1, 2013
Woodside Petroleum has outlined both cultural and operational actions it is taking to sharpen competitive edge as competing LNG supplies continue to rapidly emerge
CEO and Managing Director Peter Coleman (pictured) yesterday told
the UBS Superannuation Conference in Sydney, “standing still is not an option”.
“Given the pace at which the Australian and global LNG markets are developing, standing still actually means falling behind,” Coleman says.
Coleman says the company takes competition posed by a number of major new LNG projects in Woodside’s hometown of Perth very seriously.
He also says new sources of potential supply are emerging around the world including the first North American LNG export project, potential
from East Africa and Russia, which is making clear its intention to supply gas to major Asian markets.
In response, Coleman says Woodside has adopted a strategy which involves maximising core assets, commercialising growth opportunities and broadening its portfolio with opportunities that “leverage our capabilities”.
“We made good progress against this revised strategic direction in 2012 and the first half of 2013,” he says.
“But to ensure we lock in this strategy for the long-term, we have also made some fundamental changes to the way we approach our business.”
Coleman says the new approach comprised bringing in the right people and changes to organisation structure, processes and systems to further strengthen the LNG explorer’s capabilities in project management and execution.
“This includes a review of construction-led engineering and design to streamline fabrication processes,” he says.
“We have strengthened our marketing and commercial capabilities by building dedicated teams in these areas.
“We’ve also brought new talent into Woodside’s exploration team and strengthened our new ventures group, which has already led to new opportunities in Israel, Myanmar and most recently Ireland.”
Coleman adds technology is also a key element of the new approach.
“We are making a renewed commitment to be a leader in technology and innovation, not only in Australia, but internationally,” he says.
“We see technology as delivering not only incremental improvements, but potentially a fundamental shift in the cost profile of Australian LNG projects.
“[This shift will be achieved] through utilisation of FLNG, lean construction technology and other methods now under development.”
Just as importantly, Coleman says Woodside has embarked on a significant program of cultural change.
“After completing a major internal review of organisational effectiveness and workplace culture at Woodside, we identified several areas for improvement that led to the development of the ‘Woodside Compass’,” he says.
“The Compass differentiates Woodside as a values-led company, linking together our core values, vision, mission and strategic direction.”
“In this challenging environment, it becomes increasingly difficult for any company to go it alone,” Coleman says.
“We understand that quality partnerships across the value chain – from our co-venturers and governments, to our contractors and customers – are necessary to deliver long-term value.”
Coleman on Browse
Coleman also
took the opportunity to re-iterate the company’s position
on the Browse LNG development at James Price in Western Australia, which it decided to suspend earlier in the year.
“Browse is a world-class resource and it will be developed – but only at the right time, in the right way, to ensure maximum return to our shareholders,” Coleman says.
“We are now working with the Browse joint venture on selection of a new development concept to enable the timely and economic commercialisation of these resources.
“In fact, far from prompting us to close the door on future growth, Browse has reinforced the need for Woodside to find additional growth avenues, particularly as Australia’s cost structures become increasingly challenged,” he says.
“We are looking to diversify, spread the risk and extend ourselves further along the value chain where appropriate.
“But we are also being very disciplined, or more defensive minded, when it comes to selecting those opportunities on which we actually pull the trigger.”
Coleman says Woodside
will only pursuing those opportunities it perceives to have a clear line of sight between existing capabilities and future value.
“We are not for the moment looking at opportunities that, in order for us to take forward, require us to re-invent ourselves or acquire capabilities well outside our existing sphere of expertise,” he says.
Such opportunities outside of Australia
include Leviathan in Israel, the Rakhine Basin offshore Myanmar and the Porcupine Basin offshore Ireland, British Columbia.
Despite the cyclical fall in record-high commodity prices, Coleman adds long-term demand for key Australian resources, including natural gas, remains robust.
“We enjoy rapidly developing economies on our doorstep – not just in resources but in areas such as agriculture and services – [which] provides us with an important competitive advantage,” he says.
“But this is an advantage than can be undone if we do not resolve some systemic challenges to Australia’s long-term economic prosperity: such as rising cost pressures; stalling productivity; insufficient investment in skills and innovation; and regulatory red tape.
“All will require bold action to resolve,” he told the conference.