Welcome to the first edition of ‘Supply Chain Update’. This bi-annual newsletter from Oil & Gas UK in conjunction with PILOT will inform you on supply chain management activities across the UK upstream oil and gas sector. It seeks to raise awareness of Oil & Gas UK’s supply chain forum, forthcoming supply chain related events, networking opportunities and topical industry issues. Additionally, a key feature will be the continuous reporting on progress with regard to the application of the supply chain code of practice.
We will introduce you to our new model invitation to tenders which will simplify contracting processes; explain our innovative professional development pathway for supply chain practitioners; and present our new changing gear initiative aimed at improving engagement with the industry codes of practice. You can read about new and exciting supply chain related events coming up in 2008 such as the Supply Chain Code of Practice seminar, an even bigger and better Share Fair 10, a major supply chain conference and the prestigious Oil & Gas UK Awards Dinner.
As Oil & Gas UK’s new supply chain and commercial issues manager, I welcome you to our first newsletter and hope you enjoy reading about our activities and planned workfronts in 2008.
In this issue…
Supply Chain Forum - Full steam ahead
Supply Chain Code of Practice – Changing gear to better compliance News – Meeting EEEGr
2008 Events – Two new Supply Chain Awards • • • •
Welcome
Norman McLennan, supply chain and commercial issues manager, Oil & Gas UK
Supply Chain Update
Issue 1 April 20082007 has not only seen the birth of Oil & Gas UK, but also, as a consequence of the creation of this new pan-industry body, the formation of a new Oil & Gas UK forum - the supply chain management issues forum. This new forum provides an active body through which representatives from the UK upstream offshore oil and gas sector’s operators, suppliers and contractors can have constructive and meaningful dialogue on issues such as supply chain development and its strategic role in continual business improvement, development and publication of best practices and the minimisation of cost and waste in the total supply chain whilst ensuring business continuity for contractors and suppliers.
Ian Rattray, commercial and supply chain manager with Subsea 7 and 2008 chairman of the supply chain forum, said: “Our forum offers supply chain solutions which our industry will need in order to sustain itself and grow internationally.
We have 50 active members including operators, major contractors, medium and small enterprises, trade associations and regional representatives of the UK oil and gas supply chain clusters. The forum’s chair person alternates annually from operator to contractor members ensuring representation across our world class supply chain.
“With this new, full time supply chain management focus within Oil & Gas UK, Industry is increasingly recognising the importance of the supply chain and what it can deliver to the sustainability and continued success of this industry both in the UK and abroad.”
The 2008 vice-chair for the forum is BP’s planning and performance leader Tim Desmond.
In 2008, Oil & Gas UK and project teams from within the forum will tackle the following areas:
Supply Chain Research Project
The aim of this research project is to produce a compelling story about the supply chain in the sector and to evaluate the economic footprint of the oil and gas supply chain within the UK economy, defining the breadth of the supply chain, its high value added contribution and future growth potential.
The Changing Gear Initiative
This new initiative aims to encourage more compelling application of the industry’s Supply Chain Code of Practice. Key focus areas will be:
Increase sign up to the Supply Chain Code of Practice - embracing the new players in the sector.
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Timeliness: how we can ensure that parties share expectations and respond and progress matters on an acceptable timeframe.
Enforcement: how best to ensure compliance with the Code.
How to ensure greater use of standard terms and conditions of contract, Model ITTs and FPAL.
A new professional development pathway for supply chain practitioners in the industry
Oil & Gas UK in conjunction with OPITO (The Oil & Gas Academy) & CIPS (Chartered Institute for Purchasing & Supply) will develop and roll out a new professional development pathway for supply chain practitioners.
Value Contracting / Cost base alignment project
A forum project team will look at developing novel contracting models for use across the supply chain under specific circumstances. This workfront is necessary to craft possible solutions to the challenge of projects being deferred due to high contractor costs vs. contractor’s needs for business continuity.
The forum’s many energetic member company representatives make a substantial contribution and play a crucial role in tackling our sector’s challenges. ‘Supply Chain’ will certainly be a strong theme throughout Oil & Gas UK activities in 2008 with a number of seminars already in the pipeline for mid year, culminating in a major supply chain conference, awards dinner and of course Share Fair 10 at the end of the year.
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Full steam ahead for new supply chain forum
Norman McLennan, supply chain and commercial issues manager, Oil & Gas UK and Ian Rattray, commercial and supply chain manager, Subsea 7
The Code itself is a set of best practice guidelines, which have emerged from joint efforts by industry to standardise and simplify commercial arrangements between companies. It was originally established in 2002 and includes the popular annual Share Fair event that has helped make companies’ buying plans more transparent to potential suppliers. It
has moved companies closer towards the goal of 30-day payment cycles and increased the use of First Point Assessment Ltd (FPAL), the industry’s database of shared information on supplier and purchaser details and credentials. It currently has 128 companies signed up to it, which are working towards compliance.
The industry and government are working together through the Changing Gear Initiative to improve engagement and compliance within the sector of the three industry codes of practice (CoP). The codes are a set of best practice guidelines, which have emerged from joint efforts by industry to standardise and simplify commercial arrangements between companies. They fall into three critical areas: to ensure an efficient supply chain; create positive commercial behaviour; and improve third party access to offshore infrastructure.
Following the last PILOT meeting in November 2007, a work group was created to improve companies’ commitment to the CoP and address specific issues of concern. In particular the group focuses on:
Supply Chain CoP and the use of FPAL in prequalification
Commercial CoP (e.g. streamlining the closure of commercial deals) and the use of Standard Agreements Infrastructure CoP (e.g. ullage and transportation)
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Supply Chain Code of Practice
The group, which works under the management of co-chairs John Gallagher from Shell, and Simon Toole from the department of Business Enterprise and Regulatory Reform (BERR), has set up several meetings with the aim of pushing forward issues such as increasing enforcement of the codes and speeding up the completion of deals.
It is in the oil and gas industry’s interest to streamline processes through the use of the CoPs and focus efforts on value creation. The current level of investment on the UK Continental Shelf (UKCS) and its associated activity is stretching the available resources and this is set to increase as the UK province matures. Bill Cattanach, BERR’s deputy director energy, explained: “With costs at an all time high in the basin it has never been more important that we find ways to add value and improve performance. This will ensure the future competitiveness of the UKCS. As the diversity of players in the basin evolves and smaller operating companies arrive, we need to change to a culture of faster and slicker ways of doing business. The Changing Gear initiative is therefore one of PILOT`s current priority working areas.”
Book now
Supply Chain Code of Practice
workshop – building a case for
increased compliance
29 May 2008
The Oil & Gas UK supply chain forum will hold its first Code of Practice workshop on 29 May 2008 at the Town House in Aberdeen. The aim of the event is to create a better understanding of the different elements of the supply chain code of practice, to build a case for more compelling application of the code and to point out the benefits of the code of practice by this working towards increased compliance.
Decommissioning
Seminar
-engaging the supply chain
Sponsored by
12 June 2008
Oil & Gas UK’s decommissioning seminar will take place on 12 June 2008 at the Aberdeen Exhibition and Conference Centre. The seminar aims to promote awareness of the different types of business opportunities related to decommissioning phases and activities. It will provide guidance on the scope and precision of the decommissioning estimate at various stages of the development life cycle and identify technology gaps, cost opportunities and risks.
For more information on either of these events or to book your place please go to www.oilandgasuk.co.uk/new/events or contact our events team on 01224 577250.
Changing Gear to Better Compliance
For further information about the Suppy Chain Code of Practice, please contact Norman McLennan at
[email protected] or on 01224 577330
The Oil & Gas UK supply chain forum and representatives from EEEGr met in Norwich at the beginning of February to discuss working together to ensure a sustainable future for the oil and gas contracting community based in the East of England. Oil and gas contractors in the region make an important economic contribution to the UK economy and have the potential to enjoy sustained success by streamlining business processes. Supply chain managers from a range of companies represented by Oil & Gas UK and John Best, EEEGr’s chief executive, focused their discussions on increasing efficiency and hence the competitiveness
of the oil and gas supply chain in order to secure long-term business both in the UK and overseas along with the associated jobs, skills and technology development. Norman McLennan explained: “Oil & Gas UK held its supply chain forum meeting in the east of England as it is an important area within the UK’s oil and gas industry. By working co-operatively to improve working practices, oil and gas operators and contractors can ensure that the east of England becomes an important point from which the UK oil and gas supply chain’s domestic and export activity can be increased.”
Oil & Gas UK in conjunction with OPITO The Oil & Gas Academy and CIPS are currently working on a joint initiative to develop a new professional development pathway for supply chain practitioners. The new scheme will be targeted at those already working in the UK oil and gas sector and those considering entering the industry. David Doig, chief executive of OPITO The Oil and Gas Academy, explained: “This is an excellent initiative which seeks to tackle our industry’s skills shortage, one of the key challenges the oil and gas sector
Oil & Gas UK enhances supply chain engagement
in East of England
News
faces. Being able to offer a structured pathway with multiple entry points which align with NVQ levels is vital to attract people into the industry. In addition, this new education pathway will also cater for the development needs of those already within the sector and wishing to embark on a professional development route. The discipline of supply chain management is crucial to the efficient and effective working within our industry.”
The new education scheme will offer a flexible mode of taught delivery with most of its modules being available by distance learning on-line/e-learning using the virtual campus concept. Taught sessions will also be available, where appropriate. Entry onto the scheme will be dependent on existing experience, qualifications and competencies achieved to date as measured against a competency matrix. The scheme ladder will enable progression to become full corporate members of the Chartered Institute of Purchasers and Suppliers, the attainment of which
Strengthening the chain – launch of professional
development initiative
opens up significant cross industry opportunities.
It is hoped that the new pathway will be launched at the end of 2008 in readiness for those wishing to start the courses in January 2009.
Model invitations to
tender – now
available online
Model Invitations to Tender (model ITTs) are four documents helping to simplify the contracting process between purchasers and suppliers in the oil and gas industry and offer major cost and time savings for both parties by eliminating duplication of effort and information.
The four guideline documents, which cover the areas of marine construction, topside support, well services and drilling, provide a standard layout for suppliers to follow when structuring their response to a purchaser’s request for services and/or equipment.
Ian Donaldson, former chair of the Oil & Gas UK supply chain forum and supply chain manager with Talisman, explained: “The model ITTs provide an easier and faster way to produce, issue and respond to invitation to tenders and bid packages. Using the model ITTs is beneficial to both parties alike as operators can cut costs in the stages of tendering and evaluation and contractors in preparing their bids. Cost savings can be in the region of £25,000 to £50,000 per bid and given the volume of spending across the industry this will translate into savings running into millions of pounds annually.” All four model ITTs can be downloaded free of charge from the FPAL website: www.fpal.com.
PILOT Share Fair 10 – keeping abreast of business opportunities
11 November 2008
The tenth annual PILOT Share Fair has been confirmed for Tuesday 11 November 2008 at the Aberdeen Exhibition & Conference Centre. This event is an excellent opportunity for suppliers in the UK to keep abreast of business development opportunity and for industry to gauge suppliers’ appetite for staying committed and focused to investing and developing the UK continental shelf.
During the day, companies will be talking about their strategies for the North Sea, including upcoming drilling programmes, technology requirements, environment and integrity projects, plans for operations and maintenance, decommissioning and development projects, as well as providing key company contact details. Delegates can listen to over 100 group presentations or gain detailed information in pre-booked private one-to-one sessions with prospective clients.
The PILOT Share Fair in 2007 attracted a record breaking 600 delegates from across the UK and overseas and at this year’s Share Fair 10 we are hoping to exceed this success. Finding out what the major players are planning is critical to the future success of the whole supply chain and Share Fair 10 provides this opportunity.
Interested in presenting at Share Fair 10?
Contact Norman McLennan at [email protected] or on 01224 577330
The UK oil and gas supply chain conference – a jewel in the crown
12 November 2008
Oil & Gas UK is proud to present its first ever supply chain conference. This high profile event, to be held on 12 November 2008 at the Aberdeen Exhibition and Conference Centre, will examine the compelling case for a long term sustainable supply chain anchored in and serving the UK but also as a centre of excellence for export.
The event aims to attract up to 400 delegates both from within and out with the oil and gas sector.
Themes to be discussed throughout the day will include:
The enormous contribution that the supply chain in the UK oil and gas sector makes to the economy;
Contemporary value contracting solutions which will complement sustainability and how we combine a sustainable UKCS supply chain with global oil and gas activity; Best practice methodology – both from within and out with the sector;
The cutting edge supply chain practices being promoted in the UKCS to streamline and make supply chain activity more efficient and cost effective.
The conference will feature a series of inspirational speakers from both the UK and the global oil and gas industry, sharing their successful experiences and proposing new and improved ways of doing business to ensure a combined sustainable UKCS supply chain with global oil and gas activity.
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Events
‘08
Supply Chain Conference
10
Oil & Gas UK Awards – encompassing the supply chain
This year’s prestigious Oil & Gas UK awards will be held following the supply chain conference on November 12th 2008. The competition celebrates young talent and recognises the importance of mentors working in the UK oil and gas industry.
For the very first time this year, Oil & Gas UK has created two new awards to recognise and honour the outstanding achievements from the oil and gas industry’s supply chain:
The Oil & Gas UK Joint Award for Supply Chain Business Innovation, which
recognises the implementation of novel contracting strategies which have wider application potential across the industry.
The Oil & Gas UK Award for Supply Chain Professional Development, which
recognises the outstanding commitment made by an organisation to the professional development of its supply chain practitioners.
Nominations for both of these awards will be invited in the summer of this year.
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Events
‘08
Book these events online at http://www.oilandgasuk.co.uk/new/events
Principal Sponsor
h�p://www.oilandgasuk.co.uk/new/events
BOOK NOW
Want to help shape the future of the UK oil and gas industry?
Want to get your views across to today’s captains of industry?
Here’s your chance!
The Oil & Gas UK Next Genera on Conference is an opportunity for young professionals working in the oil and gas industry to think innova vely about the key issues affec ng the UK con nental shelf. This is your chance to get across your ideas about the industry’s direc on to its current leaders.
Four talented young speakers will present on:
Industry Skills, A rac on & Reten on - Sam Howard, project manager at OPITO Oil & Gas Academy
Health and Safety - Jessica Burton, Oil & Gas UK business analyst
Business and Commercial Drivers in a Compe ve UKCS - Mike Mair, project manager at PSN
Environment - Emily Ferguson, geologist at Maersk Oil North Sea UK
Suppor ng Sponsors
Date: Wednesday 23 April 2008
Venue: Aberdeen Exhibi on & Conference Centre
Time: 9.00am – 5.00pm (followed by networking recep on) in associa�on with SPE Young Professionals Programme
