Oil giants team up to buy on the net

Multibillion-dollar savings are set to sweep across the oil and energy industry with the launch of an internet based global electronic marketplace, industry leaders have claimed.

Last week, 14 of the world’s leading petrochemical and energy companies leant support to a radical shake-up of traditional trading methods with the setup of an industry specific e-procurement exchange.

BP Amoco believes the global project is set to slash as much as $37.5bn from an estimated $125bn channelled into purchasing costs by the founding partners. “We can look at making savings from five per cent to 30 per cent on our transaction costs on anything from purchasing paper clips to oil rigs in the North Sea,” said a BP Amoco spokesman.

Prime movers BP and Royal Dutch/Shell began peddling the ecommerce idea among industry colleagues this January, following similar moves in the automotive and aerospace industries.

Technology will initially be supplied by ebusiness market leaders CommerceOne, who already provide automotive giant General Motors with an online exchange, GM TradeXchange, for its partners and suppliers.

An independent company will be created to own and operate the exchange, with 75 per cent of equity owned by the energy and oil companies, and staff and technology providers allocated the rest.

Consortium members include Conoco, Dow Chemical, Equilon Enterprises, Mitsubishi Corporation, Motiva Enterprises, Occidental Petroleum, Phillips Petroleum, Repsol-YPF, Statoil, Tosco Corporation, TotalFinaElf and Unocal.

This story has been republished from AccountancyAge.com