Higher Return on Capital Employed (ROCE) in Oil & Gas Downstream Operations Part 3: Increasing Revenue
Executives responsible for managing Oil & Gas downstream operations are being tasked to come up with new ways to either cut costs or generate higher revenues over the life of their process plants. Although many rely on rising crude oil prices to drive revenues, this is a short-term strategy that should be supplemented with longer term efficiency improvement initiatives. Many are investing in new technologies to help streamline operations but are having difficulty in assessing the business value of that technology. Measurements in revenue gains or cost savings should not only be scrutinized by assessing the value of individual technology components, but as an integrated whole. In this way a metric such as Return on Capital Employed (ROCE) can be used to identify how much the new technology is contributing to the value to the operation. ROCE represents the percentage return that a company makes over its invested capital, a measure of the profitability and value-creating potential ...