First open online marketplace for oil and gas industry created

The first open global online marketplace for the oil and gas industry is being co-developed by Statoil, the world's second-largest supplier of crude oil, and leading provider of inter-enterprise software solutions, SAP AG. This will enable leading oil and gas companies to collaborate and conduct commerce over the Internet.

SAP will provide the infrastructure through mySAP.com, an open collaborative business environment, and will host the marketplace, while Statoil will include a select number of its suppliers to participate in the pilot.

The mySAP.com Marketplace for the Oil and Gas Industry will be open to all members of the oil and gas industry. The initial focus will be on procurement of equipment and services for upstream and downstream business including maintenance, repair and overhaul (MRO) goods and services, spare parts, equipment, and oil field services.

Statoil, whose procurement's costs reached $4 billion in 1999, expects a substantial cost saving from the initiative.

"With intense global competition, oil and gas companies need to continuously develop innovative ways to increase the efficiency of their operations to maintain a competitive edge," says Dieter Rafalsky, head of the SAP AG Industry Business Unit for the oil and gas industry.

"With the new mySAP.com Marketplace for the Oil and Gas Industry, oil and gas companies will be able to embrace the Internet to expand market reach, reduce operational costs and improve customer satisfaction. SAP is extremely pleased that Statoil has chosen to participate to deliver the first open online marketplace for the oil and gas industry."

On the local front, initial discussions with South African oil-companies began in October last year at the annual SAP Southern Africa user conference.

Says Arjen van de Voort, product manager: Oil & Gas for SAP Southern Africa: "As a result of this, the first South African oil-company embraced mySAP.com late last year (1999). Since most oil-companies use SAP solutions, we are well positioned to assist the African oil & gas industry to cut procurement costs significantly, feeding through in lower capital expenditure. In fact, analysts estimate e-commerce can cut procurement spending by between five and 15 percent."

For buyers, the marketplace will result in reduced transaction costs, quick and easy evaluation of product alternatives, simplified handling of calls for tender, increased market transparency, and up-to-date product information. Benefits for sellers include expansion of markets, lower costs of sale, focused market presence, reduced transaction costs, reduced time of accounts receivable open, simplified handling of calls for tender, and reduced marketing cost. The mySAP.com Marketplace for the Oil and Gas Industry is expected to begin operating in the second quarter of 2000.

"Statoil's continued success in a highly competitive market is dependent on our ability to remain on the forefront of utilising new technology," said Peter Tronslin, vice president of Corporate Procurement and Industry Relations, Statoil, who has process responsibility for the integrated supply chain. "We expect SAP to provide us with the technology we need to address the requirements of the industry. We're pleased to work together with SAP and expect that the pilot will help to realise our strategy."