With the complexities and dangers of travelling to some of the world’s most remote and unsettled destinations, the oil and gas sector is a challenging environment for travel buyers.
Over the last year, a series of incidents have thrown into sharp focus the issues that buyers and their companies can face: the siege at an Algerian gas plant in early 2013, which saw the death of 40 energy workers; the crash of a helicopter carrying North Sea oil workers in August, killing four people; and the evacuation of energy workers over Christmas in South Sudan due to the country’s civil war.
Given this background, it is hardly surprising that health and safety has become the number one priority for companies in the oil and gas industry – talk to any buyer in the energy sector at business travel events and this is a message that comes over loud and clear.
Ryan Taylor, who has spent 17 years working in the sector, says there is now a “huge focus on duty of care” which has become more prevalent over the last two or three years. “Buyers are increasingly working with their health and safety vice-presidents – I think this is mainly down to events around the world which have affected the industry,” adds Taylor, who is currently global travel manager for oilfield engineering specialist Sparrows Group.
Duty of care
Managing risk for travellers within the industry, as well as ensuring their duty of care, were the major topics on the agenda during the Global Business Travel Association’s Oil, Gas and Marine Travel Symposium, held in Copenhagen last October. Speaking at the event was Mike Mann, senior vice-president of global health, safety, security, environment and quality for Stork Technical Services.
He highlighted four major elements to duty of care: managing the safety and wellbeing of employees; managing and assessing risks to the company’s business; identifying risks and reducing them as much “as reasonably practical”; and complying with laws and regulations.
He also identified four major areas of concern for oil and gas companies: health, including diseases such as malaria and the lack of adequate healthcare facilities; the safety of transport and hotels; security threats, such as potential terrorist attacks, kidnapping and civil unrest; and, finally, environmental events including earthquakes, tsunamis, or ash clouds grounding aircraft.
With all these potential problems, it’s not surprising that oil and gas companies work closely with their travel management companies (TMCs), and travel security specialists, such as International SOS and Red 24, who put together evacuation plans for workers should the need arise for a speedy escape.
Adam Knights, group sales and marketing director for ATPI Group, says: “Almost every company we deal with in this sector has an emergency response team and situation room ready for these types of occurrences. Not being prepared is simply not an option to customers or to a supplier of the customer when the call comes.”
When energy workers are affected by a crisis, the importance of traveller tracking becomes paramount. Some companies are giving their travellers to what are potentially high-risk areas Smartling mobile tracking devices, which connect to a satellite network and feature an emergency button.
According to HRG director Susan Lancaster, oil and gas companies can change their travel plans even for incidents not directly affecting their operations, such as the shopping mall terrorist attack in Nairobi last year.
“One of the crew changes was due to transit through Nairobi with crew members coming in from all parts of the world,” says Lancaster. “But because of the shopping mall incident, the company’s head of security decided that crew members had to be diverted via different airports. Cost was not a consideration as employees’ safety was top of the list – even though the incident had nothing to do with the company’s operations.”
While it is clear that duty of care increasingly overrides all other considerations for oil and gas companies, particularly when they are affected by major incidents, the price of travel will always be at the forefront of buyers’ minds. Reports, such as Carlson Wagonlit Travel’s 2014 Travel Price Forecast suggests that overall rates across the world will be rising – albeit moderately – this year.
FCM sales director Graham Ross says: “Travel budgets are definitely going up. This is due to a combination of growth in the sector, hence more travel, and the rise in the cost of travel, often because travel is at short notice, so fares are more costly. Predictions for the future of the industry look very promising and travel will rise accordingly.”
Other TMCs point to the diversity of travel arrangements needed to get to far-flung installations and facilities that cannot be reached through commercial airlines and, instead, require some element of charter flights. ATPI’s Knights adds: “The vast majority of our customers are broadly budgeting mild cost increases on like-for-like travel but, of course, higher budgets generally reflect a buoyant market – for example, many new rigs are coming to the market with firm contracts this year.”
Knights also points out that one of the “significant headaches” for buyers has been the varied way that airlines choose to categorise different types of ‘marine’ and ‘offshore’ workers, and hence whether they qualify for reduced airfares. “Not all airlines use the same criteria in what is a very specific category,” he says. “This makes communication and application of fares to the customer a difficult process. Traditional offshore and marine discounts are increasingly harder to come by as airlines reduce capacity in these classes.”
Many oil and gas companies also choose to manage their travel budgets project-by-project, rather than on an annual basis, with firms setting out their travel costs as part of the initial bidding process for contracts. HRG’s Lancaster says the industry is very “project-driven”, which means that when spending on a specific project goes over budget, travel costs are likely to be reduced – typically through bans on internal travel between the firm’s offices.
Improvements in technology and the persistently high price of oil and gas in recent years have combined to expand the global map for the industry, particularly in the US with the shale energy boom set to help the country to become the biggest oil producer by 2015 – overtaking Russia and Saudi Arabia – according to the International Energy Agency.
Dan Hakansson, general manager for the Nordic region at American Express Business Travel, says: “Due to rising fuel prices, drilling and exploration in extreme sites has become even more popular and, as a result, employees have to travel even more extensively.”
HRG’s Lancaster adds that technology allowing companies to find and drill for oil in deeper parts of the sea has helped the North Sea market to boom in the last 18 months. She says there has also been a major rise in offshore production off Canada’s Pacific coastline, while Ghana has also grown as an energy destination.
Australia may be a “key market to watch” according to CWT, due to its new government’s abandonment of several environmental policies and ‘green taxes’, which may fuel a resurgence in the mining and energy sectors. The TMC also highlights Africa as an oil and gas destination, and cites “significant recent growth” in Ghana, Mozambique, Tanzania, Libya and Algeria.
FCM’s Ross says that “no two clients seem to travel to the same destination” even within the same continent, due to drilling rights and fierce competition in the market. “While one client will suddenly start travelling to Angola, another will send large numbers of employees to a different African country,” he says. “Russia will become even more important over the next 12 months, due to its potential in the shale gas industry. We are also seeing more travel to South America.”
Other untapped areas include Greece, Cyprus and New Zealand, which are “all seeing increased exploration activity and success”, according to ATPI’s Knights.
Expect the global travel map to become even wider and the logistics more complicated for buyers in this sector in the next few years, as it continues to be one of the most challenging areas of travel management.