Information technology in Lukoil

2021: SAP is increasingly taking root at Lukoil. Domestic solutions in the market are not enough

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 - approx. TAdviser). At the industry forum on September 15, Alexander Podolsky, head of the Lukoil information technology support department, 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" so that a full-fledged managerial accounting is obtained, "says Podolsky.

To do this, the whole picture of ownership and structuring of both the business model, business processes, and the overhaul 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 Lonyakov)"

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 by^[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: LUKOIL^[3] for various configurations for automation^[4] accounting, tax, management and operational processes]. 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 says that the company uses business-critical local solutions based on 1C, including accounting information systems of the centralized business process of accounting and tax accounting of enterprises.

At the forum, Alexander Podolsky did not specify the fate of 1C decisions 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 moment 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^[5].

On the one hand, unlike other major players in the oil and gas market, Lukoil is a private company, while government directives on the import substitution of IT solutions are aimed at state-owned companies and state-owned companies. On the other hand, against the backdrop 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 at the forum noted 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 domestic digital platforms that could fully replace the decisions of the largest foreign vendors are not enough. In order to create software on the Russian market to replace the solutions of world suppliers and the vendor company that will subsequently support it and issue releases, 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, production platforms to be correct, since in general oil companies do the same thing. And it is worth investing in this together with other industry players.

Together, look for partners in the market, invest in them together so that an environment appears in the future that can produce normal releases, maintain the quality of this product in the life cycle, "says a representative of Lukoil. - Today it is objectively not. There are small vendors who innovatively took up a certain product line and did not bring it to the end, because they have few resources, there is little investment in them. The state allocates funds for the development of such companies in various forms of incentives, 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 with the provider of IT solutions "Figure" to create industrial platforms. He considers the project successful, because this is a mathematically very difficult task.

This is about 40 open source solutions, integrated among themselves, rewritten actually again, adapted for production topics together with manufacturers. The platform turned out to be complex, heavily serviced, perhaps not fully reliable, "Podolsky said. - And either Lukoil invests in Digital, bringing this platform to some perfection, and then Figure goes through the market and tries to sell it to everyone, while everyone has their way, and it is not sold to anyone. Accordingly, all my investments turn out to be in the absorption of the employees of "Numbers" and entering the DevOps.

But the trend is different, said 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 and maintain various programming environments.

We are oil companies, we produce oil. We're not IT companies. Where do I go with this DevOps then? Lines are changing, and I have to finance this wallet with developers, programmers on the entire life cycle, "says Alexander Podolsky. "I need partners, vendors, unification.

The management of information technology support for Lukoil's activities is carried out by its 100 percent subsidiary Lukoil-Technologiya. 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-Technology as an IT-inspiring 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 switched to digital rails

At the end of 2020, Lukoil built a total of 61 integrated models of fields, which already provide more than a third of the company's hydrocarbon production. Lukoil reported this in its annual report.

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

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

The concept of an intelligent field (LIFE-Field) is to integrate field management processes based on automated computer systems and high-tech data collection systems. It covers the full production cycle of the project development - from the stage of search and exploration to the completion of development - and includes such blocks 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 and subsequent effective elimination. For example, a significant effect is the increased coordination of geological modeling and modeling of the infrastructure arrangement of the field, "Lukoil explains in the annual report.

At the same time, at the Imilorskoye field - one of the largest fields in the Khanty-Mansiysk Autonomous Okrug - the model was built in two configurations. The first - simplified, for operational work and calculations on an ongoing basis, the second - integrated with the hydrodynamic model, for long-term calculations.

In 2020, production at the Imilorskoye field increased by more than 20% compared to 2019. And since the beginning of the implementation of the project of the intellectual field from measures using a comprehensive approach, increasing the speed of decision making and quality of decisions, the additional production of hydrocarbons amounted to 15 million barrels. AE (barrels of oil equivalent - approx. TAdviser).

The application of the concept of an intellectual field in the early stages of development shows high efficiency, Lukoil says. One example is the V. Filanovsky field, the largest oil field in the Russian sector of the Caspian Sea. According to it, during the implementation phase, using the integrated model, solutions for the placement and design of production wells were effectively adjusted.

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

As of 2020, nine Lukoil organizations implemented projects to introduce integrated field models. By 2025, the company expects to build a total of 125 integrated models of^[6]future, Lukoil expects to produce about 80% of all its hydrocarbons^[7] intellectual fields^[8].

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

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

2019: Key digitalization results

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 increase 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 at Lukoil in three business segments. There is 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 improving 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 the fields under development were built and mobile reporting on priority business segment projects was developed.

At the pilot sites of mature deposits, the high efficiency of using neural networks to manage production and flooding has been confirmed, the company said. It is planned to begin scaling this technology.

Also, for the first time, Lukoil created a model of ground infrastructure using the example of the Vatyegan 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 intellectual deposit, emphasize in "." Lukoil At the end of 2019, 45 integrated field models were built, providing more than a quarter of the company's hydrocarbon production, which is 55% more than in 2018.

Since the beginning of the project implementation, additional hydrocarbon production has amounted to more than 7 million barrels. AD, according to the company.

Applying the concept of an intellectual field to deposits in the early stages of development shows high efficiency, Lukoil says. One example is the V. Filanovsky field, according to which during the implementation phase, using an integrated model, solutions for the placement and design of production wells were effectively adjusted. This allowed to bring the field to design capacity within less than two years.

At the Yu. Korchagin field in the Caspian Sea, the concept of an intellectual deposit has been applied since 2015. Based on the results of application of this concept, in addition to the already operated hydraulic systems of intelligent completion, an ultra-modern electrical system has been introduced at the wells of the field since 2018. It allows you to more flexibly control the influx of individual zones of the well and quickly block possible gas breakthroughs from the gas cap of the field.

Processing, Trade and Sales

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 business segment "Processing, Trade and Sales." For example, the Perm Refinery introduced a system of predictive analytics of the state of dynamic equipment.

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

At the Volgograd refinery, a video analytics system was commissioned 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 increase efficiency. This is an integral part of the group's long-term strategic development program for 2018-2027, which includes about 100 initiatives.

As part of the implementation of this strategy in 2018, the company carried out work 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 business segment "Exploration and Production"

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

An important project in the field of digitalization is the introduction of the concept of an intelligent field (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 the project development - from the stage of search and exploration to the completion of development - and includes such blocks as integrated modeling, integrated planning, an 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 and subsequent effective elimination. For example, increased coordination of geological modeling and simulation of the infrastructure arrangement of the deposit gives a significant effect.

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

The application of the concept of an intellectual deposit to deposits in the early stages of development shows high efficiency. One example is the V. Filanovsky field, according to which during the implementation phase, using an integrated model, solutions for the placement and design of production wells were effectively adjusted. This allowed in record time - less than 2 years - to bring the field to design capacity - give an example in the company.

Digitalization in the business segment "Processing, Trade and Sales"

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.

Here in 2018, a number of projects in the field of digitalization were implemented. For example, the Perm refinery introduced a solution to optimize the distribution of energy flows in order to improve energy efficiency.

Digitalization in the Enterprise Center business segment

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 Regional Accounting Center Lukoil, as well as in foreign organizations of the group.

Creation of Lukoil-Technologiya

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

One of the key projects of Lukoil-Technologiya is the creation of an integrated management system based on SAP in the group.

Lukoil-Technologiya was created as the successor to Lukoil-Inform, which has been operating since 2005. Rumors appeared in the media that after the creation of Lukoil-Technologiya, Lukoil plans to sell^[9]. In addition to servicing Lukoil companies, Lukoil-Inform provides IT services to external customers.

2016: Memorandum of Strategic Cooperation with SAP

In June 2016, Lukoil and SAP signed a memorandum of intent for strategic cooperation in the field of information technology^[10]. The companies intend to develop the established foundation of information systems using innovative approaches and SAP solutions to transfer business to the digital sphere.

Among them, they will work on optimizing the IT systems used, as well as introducing new technologies to optimize hydrocarbon production and processing, forecast retail sales, and better manage material and technical resources, risk, industrial safety, personnel and supply chain.

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

According to Lukoil's annual report, as of 2015, ISS based on SAP solutions was implemented in 118 group organizations, 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 directed hydraulic fracturing (GRP) technology, ordered the development of methods, algorithms and software for geological and geomechanical modeling for the purpose of conducting directed and multi-zone fracturing.

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 software for GRP - a method of oil production that is gaining popularity in the world and in Russia.

IT projects in Lukoil NK

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