PDO reduces planned expenditure by $1.5b this year by enhancing efficiency

Business Tuesday 02/May/2017 17:27 PM
By: Times News Service
PDO reduces planned expenditure by $1.5b this year by enhancing efficiency

Muscat: To boost near-term cashflow, Petroleum Development Oman (PDO) has reduced planned 2017 expenditure by almost $1.5 billion through project re-phasing, closer collaboration with contractors and a further comprehensive review of costs across the organisation.
The company will continue to drive further cost reduction opportunities to improve the country’s budgetary position, including through its Lean business efficiency programme, the PDO said in its sustainability report.
“Throughout 2016, we held 24 Contract Optimisation Reviews (CORs), which are focused, multi-day workshops where PDO, together with the relevant contractor, identified opportunities for efficiency enhancement and waste elimination. This resulted in the identification of $64million cost savings for the year. For 2017, a total of 30 CORs are planned, with 2017 COR savings expected to amount to $91 million,” the report noted.
Through its Low Oil Price Response (LOPR) programme, PDO has invited contractors to review their contracts and provide ideas for value improvement and cost saving opportunities. This resulted in $143 million cost savings in 2016 and is expected to deliver $364 million cost savings in 2017.
The operational expenditure (Opex) budget included a cumulative total of around $200 million savings, and the 2017 budget includes a total of more than $225 million savings.
Over 160 Lean efficiency improvement projects to remove waste and streamline work have been completed across PDO and more than 200 projects are ongoing. “To date, more than $400 million has been generated by Lean in terms of extra revenue, cost reduction or cost avoidance,” according to the report.
Business efficiency is a strategic aim to ensure PDO’s long-term sustainability and deliver value to stakeholders. The company further enhanced its rigorous cost management regime in the light of the low oil price environment and stepped up its implementation of Lean to eradicate waste and streamline operations.