Lack of clarity relating to contract responsibilities leads to unwanted surprises
Quantify delays, cost overruns and examine the reasons behind the ailing fpso supply chain
Role of the oil companies, development complexity, regulation and conflicts of interest within the value chain
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Supply chain management of rig & fpso- floating production,storage and offloading systems
1. Supply Chain Management of Rig &
FPSO- Floating Production, Storage
and Offloading systems
Presented By: Tochukwu Ben Anozie
4th Annual Logistics in oil, gas & petrochemicals Summit
15th April,2015
2. Oil & gas supply chain network & analysis
Rig supply chain network & process
FPSO Supply Chain Network
Rig and FPSO relationship
Lack of clarity relating to contract responsibilities leads to unwanted
surprises
The unwanted surprises in rig and FPSO supply chain
Reasons behind the ailing FPSO supply chain
Role of companies , development complexity, regulations and conflict of
interest within the value chain
OUTLINE
7. LACK OF CLARITY RELATING TO CONTRACT RESPONSIBILITIES LEAD TO UNWANTED
SURPRISES
GUIDELINES FROM OPERATORS: There are many standards and requirements to
build one-off design that substantially increase the cost.
CONTRACTING CHALLENGE: EPC contractor don’t sign a long time contract any more
due to fluctuation in day rate.
POOR PRESENTATION OF SPECIFICATION BY OPERATOR: Standard & requirements
are presented in stacks of documents and it is very difficult for contractors to deal with
and makes the process side of the business much more expensive
SCOPE CREEP: This usually occur in every FPSO project. This may be important but it
will always delay the building process
ENGINEERING SPECIFICATION CHANGES: review in specifications as a result of
technological changes or need to add special features.
8. THE UNWANTED SURPRISES IN RIG AND FPSO SUPPLY CHAIN
QUANTIFY DELAYS
These are disruptions within the rig and FPSO supply chain that can be measured in
figures either by (Days Weeks &Months)
Rig & FPSO SC quantify delays analysis in months
Source: Douglas wood 2014
9. THE UNWANTED SURPRISES IN RIG AND FPSO SUPPLY CHAIN
OVERRUN COST
The Amount by which the total cost of ownership for rig and FPSO project exceeds the
budgeted, or target cost.
Months
Adapted: Douglas wood 2014
•Forecasting Error (price, project
timeline)
•Uncertainty (Natural disaster)
•Inadequate planning process
•Unclear scope of work
•Inadequate material and information flow
•Inadequate resources
•Inefficient financing
•Inefficient use of resources
•Inefficient contract management
Technical factors Economical factors
Rig and FPSO SC overrun cost Analysis in months
Causes of Rig and FPSO SC overrun cost
10. REASONS BEHIND THE AILING RIG & FPSO SUPPLY CHAIN
Governing conditions
Project complexity
Regulation Challenges
Local content
Floating industry suppliers
challenges
Supply chain complexity
Organisational learning
Nature and size of project
Shipping industry
influence
Industries Comparison
Comparison of drilling
industry
Rig & FPSO SC Issues
•Overrun Cost
•Risks
•Quantify delays (disruptions)
The reasons behind ailing rig & FPSO supply chain are grouped into 3 categories:
11. ROLE OF OIL COMPANIES , DEVELOPMENT COMPLEXITY, REGULATIONS
AND CONFLICT OF INTEREST WITHIN THE VALUE CHAIN
OIL COMPANIES
Regular cost examination: This encourage change in rig and FPSO procurement
procedures.
supply chain development: Continuous improvement in the SC will result in achieving
resilient and robust SC at lowest cost and reduction in delays.
DEVELOPMENT COMPLEXITY
Execution quality and efficiency is enhanced: due to project development that builds
on industry experience.
Repeatability: helps the supply significantly in area of right material selection in
terms of quality vendor selection and lead time management
REGULATION
Changes in the regulatory framework: This may bring about meaningful impact on
the SC to meet future demand.
Complexity and underdevelopment of FPSOs regulation: this have affect FPSOs
relocation and other mobilisation as well as treating each FPSOs as a separate entity.
CONFLICT OF INTEREST
Increase the project complexity: it make the project execution cumbersome which
adversely affect the suppliers and the projects efficiency.
12. RECOMMENDATIONS TO AILING RIG AND FPSO SUPPLY CHAIN
Collaboration among stakeholders along the value chain-executive support
Adopt lean Six Sigma methodologies in Supply Chain for process improvement.
Institutionalise Supply Chain best practice
Commitment to procurement resources management
Develop performance metrics for monitoring Supply Chain