The true cost of cost-cutting: maintaining preparedness in a changing oil and gas landscape
Understanding the changing risk landscape
Like many sectors, the oil and gas industry is still weathering the storm caused by the COVID-19 pandemic. Compounding the issue, businesses across upstream, midstream, and downstream are in a state of broader transition, responding to the global shift to renewable energy and facing an increasing need to address carbon neutrality expectations.
Headcount reductions remain high on the agenda as companies look to increase their margins and recoup the historic losses they incurred in 2020. This ongoing trend for cost-cutting raises questions around unintended consequences and the potential to impact how businesses maintain agility, operational performance, and preparedness standards with a reduced workforce and lower investment levels.
Why cost-cutting impacts operational preparedness
In terms of oil spill response, twelve months from the outbreak of COVID-19, OSRL has seen the number of oil spills decrease in line with the reduction in oil demand. To many, it would therefore seem that the overall risk profile should have also reduced. Unfortunately, risk simply doesn’t work like that.
Emerging threats and unpredictable crises
Despite reduced global traffic, there was a spike in shipping incidents in 2020, partly due to pandemic-related issues such as disruptions to maintenance programmes, delayed port inspections, and crew fatigue. Geo-political tensions also present significant risk, with the potential for high-profile attacks and unrest. Oil refineries and infrastructure in politically unstable regions remain vulnerable.
In response, oil and gas operators must prepare for a broader spectrum of risks, including those that are harder to predict or have not previously occurred.
The real cost of being unprepared
The oil and gas sector is under greater regulatory scrutiny than ever before, and potential fines for non-compliance are increasing. Reputational risk is also at an all-time high, magnified by the speed and reach of digital communications. A poor response to an incident can destroy years of brand trust and stakeholder confidence.
Skills gaps and the impact of workforce reduction
Job losses across the industry have been historic. The U.S. oil, gas, and chemicals industry eliminated over 100,000 jobs in just five months in 2020, according to Deloitte. Many experienced professionals—especially those who manage oil spill preparedness—have left the sector, and their knowledge has not always been passed on. This creates a significant capability gap.
Why steep learning curves don’t work in a crisis
With fewer experienced mentors in place, new staff are expected to learn quickly, sometimes without robust processes to support them. However, an oil spill is not the time to learn. The Mauritius spill demonstrated how response teams were forced into an immediate learning curve during an active incident—an extremely high-risk situation.
Outsourcing response capability: risks and rewards
Outsourcing can be a viable solution to bridge internal skills gaps—but only if the chosen partner has proven, high-impact credentials. Not all response organisations offer the same level of competence. Due diligence is essential. The right partner is not just a vendor but an extension of the team with deep-rooted experience in critical incident management.
Conclusion: build capability before it’s tested
The oil and gas industry is under pressure to reduce costs while maintaining safety and environmental standards. The risk profile is changing, and the consequences of inadequate preparedness are more severe than ever before. With fewer experienced hands on deck, and a rising number of unpredictable threats, the need for proven expertise—whether in-house or external—has never been greater.
This is not the time for complacency. Organisations must act now to safeguard their people, reputation, and the environment by investing in robust preparedness strategies—before the next incident tests their resilience.
