Management Strategies for Technical Services in the Petroleum Industry

The technical services/supply sector is one of the most dynamic components of the international petroleum industry. Increased exploration activity, particularly offshore, has led to nearly one hundred percent utilisation of capacity, along with rising day rates. As a general rule, the more complex or specialised the work or project, the more likely it is that technical services will be sourced from independent contractors. Even the largest multi-national companies rely upon technical service contractors with the skill, experience and technology to carry out exploration, appraisal and development work programmes. The three day programme has been designed to enable participants to gain an understanding about the role of technical services in the petroleum industry. The material covers all aspects of the contractual arrangements that structure the relationship between operators and technical service contractors. This course provides participants with an understanding of the selection and supervision of the scope, schedule and budget that create the relationship between operators their technical service contractors and suppliers. Who should attend? Exploration and production managers Business development managers for technical/oilfield service companies Oilfield equipment suppliers Joint venture operators Alliance teams National oil companies Programme objectives At the conclusion of the course participants will have gained the knowledge to: Understand the essential relationship between scope, schedule and budget in structuring relationships between operators and technical service contractors Learn the methods for allocation and pricing risk between operators and technical service contractors Understand the key terms and conditions that are included in drilling, well services and supply contracts Learn how various contract formats for technical services control the flexibility for changes in work programmes Understand the use of alliances, partnering and gain sharing arrangements Learn how to make technical services contracts more tax efficient Training methodology This highly focused programme is designed to encourage participation through a combination of instructor-led presentations, exercises and case-study simulations. The concepts presented are highlighted by reference to checklists and sample contracts. Each participant will receive a copy of the Instructor’s handbook on the subject and a CD with contract templates.
Day 1 Introduction Relationship between petroleum industry agreements and technical services contracts Leases, licenses and production sharing agreements Joint venture operating agreements Work programme fundamentals – scope, schedule and budget Role of operator Role of technical services contractor Selection of technical service contractors Bid package Evaluation Contract documents and formats – API, LOGIC, IADC Regulatory oversight Contract milestones issues performance and payment Award Execution of contract Notice to proceed Progress reports Completion and acceptance Invoices Authorisation for variations and extras Termination or extension Case study: Critical path schedule well services contract Day 2 Payment arrangements Unit rates, progress payments Milestones Bonuses Credit memos Retention Contract variations Client request Contractor recommendation Upselling Risk and liability Liquidated damages Defects Downhole and subsurface conditions Environmental Indemnities Limitation on contractor liability Force majeure Events: Definition and exclusions Obligations and notification Suspension and contract extension Termination Dispute resolution Classification of claims Procedures Communications between parties Impact on relationships Evidence and testimony Case study: Contract variation based on substitution of well consumables Day 3 Performance bonds and guarantees On-demand bonds Parent company guarantee Letters of indemnity Insurance Primary cover – contractor’s all-risk Special endorsements Tax considerations Project package – service and supply Delivery and title Tax domicile of contractor Tax indemnity from operator Customs and immigration Dutiable materials Entry of non-resident employees Case study: Adjustment of delivery point to reduce tax Course summary and close