Pre-Engineered Standardized Turbomachinery Solutions: A Strategic Approach to Lean Project Management

Effective project management plays a crucial role to the success of organizations via resilient execution of activities, in terms of performance and efficiency. Due to the recent market dynamics and its associated uncertainties, affecting several segments in the oil and gas (O&G) industry, utilization of innovative contracting schemes such as Front End Engineering Design (FEED) competition, and value engineered products are becoming of great importance to achieve the project's goals optimally. This paper discusses the competitiveness and strategic benefits of employing the vendor's pre-engineered and standardized turbomachinery equipment/solutions, to meet the required functionality while maintaining the highest levels of quality and safety. Several project management concepts and tools were employed, such as SWOT analysis, to discuss the benefits of supplying vendor's pre-engineered high value and long-lead turbomachinery equipment within projects, as a cost-effective solution, in place of customized products. A Requirements-to-Implementation Mapping (RIM) exercise was also carried out to benchmark the pre-engineered solutions with the industry practices while considering the packaging requirements from well-known international and national oil companies. This paper also presents success stories of implementing pre-engineered solutions that strongly contributed in improving the management of projects from engineering to operational phase. This study works in line with the recent O&G operators’ initiatives in promoting agile approach to mitigate the forces that are impacting the industry and in turn the economy, such as COVID-19 pandemic. The study analysis, employing semi-quantitative approach, revealed that the pre-engineered solution brings to customers an improved value proposition in terms of cost, delivery, quality, safety, and aftermarket support, which contributes greatly in minimizing gold plating to achieve leaner projects. Standardized equipment is also found to be effective in minimizing the risks associated with changes and therefore improving the control on project constraints as well as simplifying the purchasing management of strategic equipment. In this respect, the use of standardization and pre-engineered activities could lead to a reduction of lead time up to 30%. The reliability of the standardized equipment will also be increased due to the proven frozen designs which have been repeatedly manufactured, tested, and supplied and therefore ensures successful and seamless project close-out. The proposed approach of mixing pre-engineered commodities to customized and configurable features based on site conditions provides the proper flexibility required by O&G industry while, simultaneously, maximizing the benefits of standardization. The strategic benefits of pre-engineered turbomachinery packages in the context of project management and supply chain process is not well recognized. This study explains these benefits to increase the customer's confidence level in utilizing this approach and benefit from its values, especially during the changing dynamics of the O&G industry.

Vertical Integration Strategy Implementation Through Hybrid Upstream and Downstream Concession Agreements

Upstream developments in prolific oil and gas fields are highly profitable and hence attract various investors/partners, whereas Downstream developments profitability is margin based and challenging under certain situations to receive similar interest for investment in the same location. Vertical Integration Strategy implementation through hybrid upstream and downstream concession agreements can help address this issue. The seventies witnessed major changes in the oil industry's structures and strategies resulting from the nationalization of oil and gas reserves. This ultimately led to a separation between the upstream sector with national oil companies (NOCs) controlling most of the world reserves and crude production, and the downstream sector with the international oil companies (IOCs) controlling the largest share of the refining and marketing aspects in the main consuming countries. In the recent past, NOCs have started forward integration of its upstream sector with downstream sector to take advantage of the synergies and increase profitability. This paper takes the strategy a step more forward by exploring the possibility of developing oil and gas assets through a hybrid upstream/downstream concession agreement that can be awarded by the host government. The model hybrid agreement is built by integrating a typical upstream concession agreement with downstream equity-based joint venture (JV) agreement. It also takes the learnings from Production Development Production Sharing Agreement (DPSA) applied in the development of a Gas-To-Liquids (GTL) asset or Liquefied Natural Gas (LNG) asset which are usually developed as an integrated upstream and downstream business model. It is also feasible to build the hybrid agreement based on upstream Production Sharing Agreement (PSA) instead of a Concession Agreement. The paper will discuss how the hybrid upstream and downstream concession agreement is built and how it will distribute the risk and rewards across the entire value chain for investors, expand the scope of investment and support in the economic development of the host country.

Nationalization, Oil and Political Regime: a Comparative Analysis of the Experience of the Soviet State and Latin American Countries

Introductions. Oil production is historically an important part of government revenues in many developing countries. The Gulf monarchies are traditionally considered as typical ‘rentier states’, while the Soviet Union is usually not classified as a Petro-state, although the USSR was an important oil producer for the global economy. The Soviet Union created a unique economic model, which was based on the administrative command methods of the national economy operation. Unlike the capitalist countries of the developing world, the Soviet Union did not create giant national oil companies to manage its oil resources, but the absence of such companies did not prevent Soviet oil industry from becoming an important source of revenue for the Soviet state. Methods. The article is organized as a comparative analysis of the Soviet Union, Mexico, and Venezuela, three countries, the governments of which nationalized their oil industries at some points in the 20th century. Results and Discussions. The article shows that oil revenues played an important role in the collapse of the political regimes of all three countries after the dramatic decrease of international oil price in 1986.

Does Organizational Justice Influence Employee Innovative Behavior in an Arabic Context? Evidence From the Libyan Oil Industry

Innovative employees are the main source of an organization’s survival in a dynamic environment. Therefore, understanding how to stimulate and sustain employee innovative behaviors is of great importance for organizations. From this perspective, based on the social exchange theory, the current study seeks to investigate the influence of organizational justice on employee innovative behavior within the Libyan context. Through a pre-designed questionnaire, data were gathered from 295 employees working for 5 Libyan national oil companies and analyzed using partial least squares—structural equation modeling [PLS]. The results indicated that procedural justice is positively related to employee innovative behavior, whereas distributive justice and interactional justice are not. The findings foster the assumption that organizational justice perceptions and responses differ across cultures based on national values. The results and implications are discussed in light of the literature and the Libyan work environment and culture.

Critical factors for unconventional hydrocarbon resources development

Countries all over the world struggle to exploit their Unconventional Hydrocarbon Resources (UHR) to secure energy supply, but only a few of them have succeeded. Regulators and decision-makers should understand the critical factors required for companies to attract capital, technology, and good practices to promote innovation and generate the virtuous cycle that translates into sustainable production. This study seeks to identify the most relevant factors for UHR commercial development. We assessed the UHR exploiting state in 60 countries and identified the critical common development factors for the 22 that are most active. The proposed Unconventional Hydrocarbon Development Index (UDI) allows to model, rank, benchmark, and forecast UHR development activity for any given country. We focused on the case of Colombia to illustrate the validity of this Index. Evidence suggests countries where National Oil Companies (NOCs) address the challenge of exploiting UHR on their own, may lack the required expertise, despite having governmental support and capital availability. It is easier for them to emulate resilient North American firms exploiting UHR by partnering with them to effectively incorporate best practices Governments can facilitate the process through UHR support, surface and subsurface risk reduction, a proper tax regime, and ESG practice promotion.