A quarter of oil and gas companies are not prepared for increasing legal risks

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20th April 2016 16:53 - Oil and Gas

A recent survey of those who work in the oil and gas industry has predicted that the sector is fast becoming what the the Director of Strategy of Achilles, James Palmer, who conducted the survey, describes as “a perfect storm of legal risk” - one which oil and gas companies are not ready to face.A quarter of oil and gas companies are not prepared for increasing legal risks

The market research was commissioned by Achilles, an oil and gas industry monitor, who spoke to 97 oil and gas companies throughout the United Kingdom, Australia, the United States, Brazil, Spain, the Middle East and South Africa.

Palmer’s storm of legal risk refers to the increasing compliance and regulatory challenges emerging within the supply chain, with fewer resources than ever before to invest in proactive solutions to the issue.

Of the participants in the survey, 28 per cent said that they anticipated that their suppliers would expose them to increased legislation. A further 25 per cent said that they were not ready to handle the risks.

One in 10 of the respondents said that they do not keep a track of occupational health and safety information for their key suppliers, and the figure increased to 37 per cent amongst those who do not have policies to deal with health and safety in lower-tier suppliers.

Mr Palmer says the figures are troubling, especially given that around 85 per cent of offshore personnel working within the sector are contractors.

Baring in mind that approximately 85 per cent of offshore employees within the oil and gas sector are contractors, Palmer said that the findings are worrying.

He said of the issue:“In the current economic environment facing the industry, the risk that suppliers and contractors take short cuts in terms of compliance inevitably increases. At the same time, the large operators are having to make thousands of redundancies across the globe, with fewer people in compliance departments to gather and check critical information from suppliers and assess their capabilities,”

“In our experience, firms can protect themselves by putting in place an effective pre-qualification programme, supported by a robust program of desktop and physical auditing.

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