Hey, big spender

Business to business electronic commerce is looming large in the future of the oil industry. It is estimated that by adopting e-commerce the industry could achieve bottom line savings of between $1.8 to $ 3.4 billion a year on annual gross revenues in excess of $ 30 billion. At present there are several teething problems to overcome such as inter-operability standards, which are at least two or three years away. Tying in electronically with specific suppliers is also an expensive proposition, although the big benefits are in fact in doing business with the same suppliers on a continuing basis. Despite these problems, 14 of the world's largest energy and petrochemical companies joined forces in mid-April to create a single Internet procurement marketplace for the industry's complex supply chain. The exchange was designed by B2B (business-to-business) software provider, Commerce One Inc., ; it will leverage the buying clout of these industry giants (BP Amoco, Royal Dutch Shell Group, Conoco, Occidental Petroleum, Phillips Petroleum, Unocal Corporation and Statoil among them), currently about $ 125 billion on procurement per year; they hope to save between 5 to 30 per cent depending on the product and the region involved. Other similar schemes such as Chevron and partners' Petrocosm Marketplace, Network Oil, a Houston-based Internet portal aimed at smaller petroleum companies, are also doing business in the $ 10 billion per annum range. e-Energy, a cooperative project between IBM Ericson and Telus Advertising is another neutral, virtual marketplace targeted at the oil and gas sector. PetroTRAX, a Calgary-based website plans to take online procurement and auction sales a big step forward by establishing a portal to handle any oil company's asset management needs. There are also a number of websites targeting specific needs: IndigoPool.com (acquisitions and divestitures) and WellBid.com (products related to upstream oil and gas operators) are just two examples. All in all, when it comes to electronic commerce, the general consensus for the oilpatch is not if, but when