GEC NEWS WIREACCA report states CFOs will play critical role in the economic survival of the oil and gas industry; believes finance organization is going to be at the forefront of driving the transformation needed in the sector
With oil prices slowly recovering from the dramatic fall last summer which forced global organizations to put multi-million dollar projects on ice, ACCA (the Association of Chartered Certified Accountants) has detailed the key areas in which chief financial officers (CFOs) working in the sector can galvanize the finance function in the fight to future-proof their business in an ever more volatile market.
Speaking on the report, titled Oil and gas – priorities and challenges for the CFO enterprise, Jamie Lyon, the author and ACCA’s head of corporate sector says, “We have all seen the impact of volatility in the market hitting the cost base and impacting capital expenditures over the last year or so. The big question now is how low and how long the oil price will remain at present levels.” The report also highlights how volatility is bringing pressure on forecasting and decision support capabilities, and more scrutiny from investors on the performance of businesses in the sector. “Corporate reporting challenges are also a key test for CFOs, particularly in relation to asset impairment and stranded assets” Lyon says.
One of the biggest issues facing CFOs in the sector is predicting the future business landscape. The report also highlights the challenges facing CFOs in terms of the cost base. “Resource allocation needs to be prioritised, and ruthlessly so. What really needs the funding? All spending will be analysed so CFOs need to tread a fine line between cutting cost but also protecting essential investment for the future. It’s a really tricky balance to get right”.
Lyon adds “Another equally important issue for CFOs longer term is the talent pipeline. Securing the right balance of operational and strategic skills in the finance function is a huge challenge across the industry, and ensuring its endurance in the longer term must be a key consideration. The big question is where the next generation of finance talent across the industry will come from.”
In summary, Jamie Lyon says: “CFOs, and the approach they use to transform their businesses to make them fit for the future, are a vital part of ensuring the oil and gas industry runs ‘business as usual’ as it works through turbulent times and continues to transform in an ever-changing world.
