Information Technology at Lukoil

2024: Lukoil will build a data center at the Konakovskaya state district power station near Tver

At the end of November 2024, it became known that Lukoil was starting to create a data processing center with an area of ​ ​ 3 thousand square meters on the territory of the Konakovskaya state district power station in the Tver region. The project provides for the creation of 20 jobs for highly qualified IT specialists. Read more here.

2021: SAP takes deeper roots in Lukoil. There are not enough domestic solutions on the market

Against the background of the course of the Russian oil and gas industry towards technological independence from imported IT solutions, Lukoil's agenda includes a large-scale transition to S/4 (SAP S/4 HANA - note TAdviser). Alexander Podolsky, Head of the Information Technology Support Department of Lukoil, at an industry forum on September 15, said that we are talking about the transition of the entire group simultaneously across all segments and mentioned the introduction of a corporate template, industry templates, platform solutions for lifting data "from below."

We create grassroots platforms for collecting the APCS part, create end-to-end ERP systems, and do not perceive ERP simply as an element of accounting and management accounting. Our task is to connect the "bottom" in order to get a full-fledged management accounting, "says Podolsky.

To do this, the entire picture of ownership and structuring of both the business model, business processes, and the re-engineering of information technology support in the company as a whole is being revised.

The new integrated system will combine the quantitative and financial data of all processes at the enterprise and will ensure the operation of all levels of management in subsidiaries and the Lukoil corporate center "(photo - RIA Novosti/Evgeny Odinokov)"

Lukoil was one of the first in the oil industry to introduce SAP: the decision to use the products of the German vendor in the group was made back in 1996^[1]. And the company implemented the first project on the SAP HANA platform in 2018^[2].

At the same time, according to Lukoil itself, its companies have been using 1C solutions for more than 15 years: various configurations for automating accounting, tax, management and operational processes^[3]. And in 2019, Lukoil announced the signing with 1C of a memorandum of intent for strategic cooperation in the field of IT.

As of 2021, the Lukoil website states that the company uses business-critical local solutions based on 1C, including accounting information systems for the centralized business process of accounting and tax accounting of enterprises.

At the forum, Alexander Podolsky did not specify the future fate of 1C solutions in the company in connection with the transition to a single integrated system of production and economic activities based on SAP S/4 HANA. And the company itself could not explain this point to TAdviser by the time of publication.

In February, Lukoil announced that the new integrated system will combine the quantitative and financial data of all processes at the enterprise and will ensure the operation of all levels of management in subsidiaries and the corporate center. The implementation process is planned to be fully completed in 2025^[4].

On the one hand, unlike other major players in the oil and gas market, Lukoil is a private company, while government directives on import substitution of IT solutions are aimed at state-owned companies and companies with state participation. On the other hand, against the background of Western sanctions against Russia, including the oil sector, the risks of using import solutions exist for all players, regardless of their form of ownership.

And Alexander Podolsky himself noted at the forum that for large international vendors Russia is a very small percentage both in value terms and on the scale of implementation, so they calmly leave the Russian market.

But there are not enough domestic digital platforms that could fully replace the solutions of the largest foreign vendors. In order to create software on the Russian market to replace solutions from world suppliers and the vendor company that will subsequently support it and release releases, a scale is needed, Podolsky noted. At the same time, it is economically unprofitable for a vendor to create such software for one of the industry companies.

The head of the information technology support department of Lukoil considers the idea of ​ ​ unifying part of the technological and production platforms to be correct, since in general oil companies do the same. And it's worth investing in this with other industry players.

Together to look for partners in the market, together to invest in them, so that an environment appears in the future that can release normal releases, maintain the quality of this product in the life cycle, "says a representative of Lukoil. - Today this is objectively not. There are small vendors who innovatively took up a certain product line and did not complete it, because they have few resources, little investment in them. The state allocates funds for the development of such companies in various forms of stimulation, but this is also not enough to create a world-class platform and jump over the solutions that work in our group today.

Alexander Podolsky said that over the past two years, Lukoil has tried to create industrial platforms with the IT solutions supplier Digital. He considers the project successful, because it is mathematically very difficult.

This is about 40 open source solutions integrated with each other, rewritten virtually again, adapted for production topics together with manufacturers. The platform turned out to be complex, difficult to service, perhaps not fully reliable, - said Podolsky. And either Lukoil invests in Zyfra, bringing this platform to some perfection, and then Zyfra goes through the market and tries to sell it to everyone, while everyone has its own path, and it is not sold to anyone. Accordingly, all my investments end up in the takeover of Zyfras employees and the exit to DevOps.

But the trend is different, according to the head of the information technology support department of Lukoil: unification is needed and internal DevOps is not needed, because "crazy costs" are needed to maintain its content, to maintain various programming environments.

We are oil companies, we produce oil. We're not an IT company. Where do I go with this DevOps later? The lines are changing, and I must finance this cat with developers, programmers throughout the life cycle, "says Alexander Podolsky. "I need partners, vendors, unification.

Lukoil's information and technological support is managed by its 100% subsidiary, LUKOIL Technology. Previously, these functions were performed by her company Lukoil-Inform. But in 2020, Lukoil announced the withdrawal of Lukoil-Inform beyond the perimeter of the group and the development of LUKOIL Technologies as an IT-insourcing company. As of 2021, according to the database of legal entities "Kontur. Focus," "Lukoil-Inform," renamed simply "Inform," is 50.1% owned by Bashinformsvyaz, a subsidiary of Rostelecom. Lukoil owns a 49.9% stake in Inform.

2020: A third of Lukoil's hydrocarbon production has switched to digital rails

At the end of 2020, Lukoil, within the framework of the intelligent field concept, built a total of 61 integrated models of fields that provide more than a third of the company's hydrocarbon production. Lukoil announced this in its annual report.

In 2020, in particular, 16 new integrated models were created, including for such large deposits as Imilorskoye, named after V. Vinogradov and named after V. Greifer.

In the future, Lukoil expects to extract about 80% of all its hydrocarbons from intelligent fields "(image -" Lukoil ")"

The Intelligent Field (LIFE-Field) concept is to integrate field management processes based on automated computer systems and high-tech data acquisition systems. It covers the full production cycle of project development - from the search and exploration stage to the completion of development - and includes blocks such as integrated modeling and planning, an integrated operations center, etc.

The concept has great potential to optimize operational processes in order to increase production and reduce costs. The main source for such optimization is the identification of bottlenecks, followed by effective elimination. For example, an increase in the coordination of geological modeling and modeling of the development of the field by infrastructure has a significant effect, "Lukoil explains in its annual report.

At the same time, at the Imilor field - one of the largest deposits in the Khanty-Mansi Autonomous Okrug - the model was built in two configurations. The first is simplified, for operational work and calculations on a permanent basis, the second is integrated with the hydrodynamic model, for long-term calculations.

In 2020, the volume of production at the Imilorskoye field increased by more than 20% compared to 2019. And since the start of the project of the intelligent field from measures using an integrated approach, increasing the speed of decision-making and quality of decisions, additional hydrocarbon production amounted to 15 million barrels. AD (barrels of oil equivalent - approx. TAdviser).

The use of the concept of an intelligent field in the early stages of development shows high efficiency, according to Lukoil. One example is the V. Filanovsky field, the largest oil field in the Russian sector of the Caspian Sea floor. During the implementation phase, the solutions for the location and design of production wells were effectively adjusted using the integrated model.

This allowed in "record time" - less than two years - to bring the field to its design capacity. The accumulated experience will be applied at another large field of Lukoil - named after V. Greifer.

As of 2020, projects for the introduction of integrated field models were implemented by nine Lukoil organizations. By 2025, the company expects to build a total of 125 integrated models^[5]future, Lukoil expects to extract about 80% of all its hydrocarbons from the intelligent fields of^[6].

The digital development programs in Lukoil's exploration and production business segment are aimed primarily at increasing oil production, reducing operating costs and increasing the efficiency of field development, the company said in its annual report.

In 2020, this segment also carried out work on the creation of centers for integrated operations, a single digital platform for data analysis and management, modeling of drilling conditions and processes, as well as automation of various management, planning and control processes. In the pilot areas of mature fields, the high efficiency of the use of neural networks for production and waterflood management was confirmed, and work was carried out to prepare for the start of industrial operation of this technology.

2019: Key results of digitalization

In the annual report for 2019, published in early June 2020, Lukoil announced the results of digitalization. The introduction of digital technologies in the company was carried out in accordance with the group's information strategy, approved in 2018. Its core is the digitalization of business processes in order to improve efficiency. The information strategy is part of Lukoil's long-term strategic development program for 2018-2027 and includes about 100 initiatives.

The report shows the results of digitalization in Lukoil in three business segments. There is also a fourth - a corporate center, but the company did not give specifics on it in the report.

The information strategy is part of Lukoil's long-term strategic development program for 2018-2027. "(photo - Lukoil)"

Exploration and Production

Digital development programs in the Exploration and Production segment are aimed primarily at increasing oil production, reducing operating costs and increasing the efficiency of field development, Lukoil notes. In 2019, two integrated operations centers were created, two automated operational dispatch control systems were introduced, new integrated models of developed fields were built and mobile reporting on priority projects of the business segment was developed.

In pilot areas of mature deposits, the high efficiency of the use of neural networks for managing production and waterflooding has been confirmed, the company says. It is planned to begin scaling this technology.

Also, for the first time in Lukoil, a model of ground infrastructure was created on the example of the Vatyeganskoye field to develop a long-term plan for the development of the asset.

Intelligent field

An important project in the field of digitalization is the introduction of the concept of an intelligent field, emphasize in Lukoil"." At the end of 2019, 45 integrated models of fields were built, providing more than a quarter of the company's hydrocarbon production, which is 55% more than in 2018.

Since the start of the project, the additional production of hydrocarbons has amounted to more than 7 million barrels from measures using an integrated approach, increasing the speed of adoption and quality of decisions. AD, according to the company.

The application of the concept of an intelligent field to fields in the early stages of development shows high efficiency, they say in Lukoil. One example is the V. Filanovsky Field, which effectively adjusted the development well layout and design during the implementation phase using an integrated model. This made it possible to bring the field to its design capacity within less than two years.

At the Yu. Korchagin field in the Caspian, the concept of an intelligent field has been used since 2015. Based on the results of this concept, a state-of-the-art electrical system has been introduced in the field wells since 2018 in addition to the intelligent completion hydraulic systems already in operation. It allows you to more flexibly control the flow of individual zones of the well and quickly block possible gas breakthroughs from the gas cap of the field.

Refining, Trading and Distribution

Digital development programs in this business segment are aimed mainly at improving the efficiency and reliability of equipment, the quality of customer service and the level of environmental impact control.

In 2019, a number of successful digitalization projects were implemented in the Refining, Trade and Sales business segment. For example, at the Perm Oil Refinery (refinery), a system of predictive analysis of the state of dynamic equipment was introduced.

The Burgas refinery has implemented a system for monitoring and forecasting the condition of equipment to predict the timing and need for repairs, reduce maintenance costs and the number of equipment failures.

At the Volgograd refinery, a video analytics system was put into operation with integration into an automated process control system.

2018

Lukoil has formed digital development programs

In 2018, LUKOIL approved the group's information strategy, the core of which is the digitalization of business processes in order to improve efficiency. It is an integral part of the group's long-term strategic development program for 2018-2027, which includes about 100 initiatives.

As part of this strategy, in 2018, the company worked on the formation of digital development programs for business segments. Lukoil announced this in its annual report, published in May 2019.

Source - Lukoil

Digitalization in the Exploration and Production business segment

Digital development programs in this segment are aimed primarily at increasing oil production, reducing operating costs and increasing the efficiency of field development. One of the successful examples of digitalization in 2018 in Lukoil is called testing neural networks for waterflood management at pilot sites of mature oil fields in Western Siberia. According to the results of testing, the effectiveness of this technology was confirmed.

An important project in the field of digitalization is the introduction of the intelligent field concept (LIFE-Field). It consists in the integration of field management processes based on automated computer systems and high-tech data collection systems. The concept covers the full production cycle of project development - from the search and exploration stage to the completion of development - and includes blocks such as integrated modeling, integrated planning, integrated operations center, etc.

Lukoil believes that the concept has great potential to optimize operational processes in order to increase production and reduce costs. The main source for such optimization is the identification of bottlenecks, followed by effective elimination. For example, the coordination of geological modeling and infrastructure modeling of the field has a significant effect.

At the end of 2018, 29 integrated models of fields located in various regions of the Company's operations were built. Production at such fields in 2018 amounted to 29% of the total production of Lukoil Group hydrocarbons, the annual report says.

The application of the concept of an intelligent field to fields in the early stages of development shows high efficiency. One example is the V. Filanovsky Field, which effectively adjusted the development well layout and design during the implementation phase using an integrated model. This made it possible in record time - less than 2 years - to bring the field to its design capacity, - give an example in the company.

Digitalization in the Refining, Trading and Sales business segment

Digital development programs in this segment are aimed mainly at improving the efficiency and reliability of equipment, the quality of customer service and the level of environmental impact control.

A number of digitalization projects were implemented here in 2018. For example, the Perm Refinery implemented a solution to optimize the distribution of energy flows in order to improve energy efficiency.

Digitalization in the business segment "Corporate Center"

Here, digital development programs are mainly aimed at increasing the speed and efficiency of management decisions, labor productivity, automation of personnel management and organizational development processes, as well as reducing the risks of cyber attacks, according to Lukoil's annual report.

In 2018, the company introduced robotization technologies for routine operations at the Perm Accounting Regional Center Lukoil, as well as in foreign organizations of the group.

Creation of LUKOIL Technologies

In November 2018, Lukoil established a new company - LUKOIL Technologies, which should become the parent organization for information technology support of the group. With 12 branches, LUKOIL Technologies covers the regions of activity of Lukoil enterprises throughout the Russian Federation.

One of the key projects of LUKOIL Technologies is the creation of an integrated management system based on SAP in the group.

LUKOIL Technologies were created as a successor to Lukoil-Inform, which has been operating since 2005. Rumors appeared in the media that after the creation of LUKOIL Technology, Lukoil plans to sell^[7]. In addition to servicing Lukoil, Lukoil-Inform also provides IT services to external customers.

2016: Memorandum of Strategic Cooperation with SAP

In June 2016, Lukoil"" SAP and signed a memorandum of intent for strategic cooperation in the field of information technology^[8]The companies intend to develop the created foundation of information systems using innovative approaches and solutions of SAP to transfer business to the digital sphere.

In particular, they will work to optimize the IT systems used, as well as to introduce new technologies to optimize the production and processing of hydrocarbons, predict retail sales, and better manage inventory, risk, industrial safety, personnel and supply chain.

By this time, Lukoil already had many years of experience in cooperation with SAP. It began back in 1996, when it was decided to implement an ERP system in the Lukoil group based on SAP. Since then, the companies have implemented many projects, the key of which was the creation of an integrated management system (ISU) at Lukoil.

According to Lukoil's annual report, as of 2015, ISU based on SAP solutions was implemented in 118 organizations of the group, and the number of its users exceeded 18 thousand people.

2014: Development of hydraulic fracturing software

In July 2014, Lukoil, as part of a tender for the development and implementation of directional hydraulic fracturing (fracking) technology, ordered the development of methods, algorithms and software for geological and geomechanical modeling for the purpose of conducting directional and multi-zone fracking.

This happened shortly before the introduction of US sanctions against Russian oil and gas companies, restricting the supply of a number of technologies to them, including hydraulic fracturing software, which is gaining popularity in the world and in Russia as a way of producing oil.

IT projects at Lukoil NK

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Notes