Drop The Dodgy Suppliers!

There can be few in the industry not aware of the dire straits in which the oil and gas industry finds itself and most especially on the UK Continental Shelf (UKCS).

Thousands have lost their jobs in and the impact has driven hard and wide in the valve industry too. Despite the paucity of exploration drilling, there is however still some business to be had, but at C. $50 per barrel, it’s a whole new ball game in terms of how that business is done, and no doubt a lot of competitive bidding… or is there? I’ve had several conversations recently with some of the UKCS operators. These were intriguing, revealing conversations, and obviously largely confidential, but they have shone a light on some of the challenges they face, and the sometimes uniquely issueridden and unhelpful way in which valve business is sometimes carried out.

Most operators, or the Engineering & Procurement Contractors (EPCs) they engage, will create an Approved Vendors List (AVL). At some point some effort will have been put into researching and creating this AVL, and a small selection of suppliers will have been engaged for each valve type.

However, via a combination of pressures of time, money, and it has to be said sometimes capability, these lists - and the specifications used - can become inflexible, set in concrete, not adapting to prevailing conditions.

Valves have become ‘pinch points’ and issues put to me include (often very) late delivery, incorrect delivery, incorrect paperwork and failure in service – the latter being a huge concern. I was able to take solace from the fact my members’ and their distribution channels were largely not cited as villains of the piece.

You might expect me to gloat at this point over the failings of ‘non-British’ companies but there is a more serious problem... Our customers have seemingly corralled themselves into arrangements where they feel they have little choice but to submit to the poor service - and the high cost.

The reluctance to move away from the AVL is endemic. I’ve been told on more than one occasion that the AVL is sacrosanct, but can I help in reducing the valve costs? Firstly the companies causing these woes are typically outside the UK and BVAA’s jurisdiction and secondly their intermediaries are often also not my members.

What I CAN cite however is recent examples of where customers have bitten the bullet and engaged a UK valve business, and got a quality product, at a competitive price, on a rapid lead time. Smiles all round and problem solved… but still the ‘official’ AVL remains unchanged!

There has to be a holistic approach to cutting costs, and there’s little point in gaining 10% off your valve purchase price when you have little confidence in the supplier’s promises, your plant is idle and haemorrhaging cash. Time for a fresh approach and a refresh of the AVLs?

BVAA would welcome dialogue, both individually and collectively with operators and EPCs, in making valve procurement a saner, considerably less painful exercise to all concerned.

Published: 17th November 2015