Lukoil Overseas Holding

Performance indicators

2022: 3.5% oil production in Kazakhstan

Chronicle

2024: Agreement on oil exploration in the Arabian Desert in Egypt

In February 2024, the Egyptian General Petroleum Corporation and the Russian company Lukoil signed an agreement on oil exploration on the territory of the West Ash-el-Milah section in the Arabian desert.

Under the agreement, the company is committed to investing more in drilling three production wells and exploring two new wells, which will lead to increased production.

2012: Information system for the West Qurna 2 project in Iraq

Work Scope Data

In 2009, LUKOIL Overseas Holding Ltd won a tender for the right to provide services for the development of the West Qurna-2 field. As a result of the tender, at the beginning of 2010, a Contract was signed for a period of 20 years with the right to prolong for another 5 years. The parties to the Contract are LUKOIL Overseas (56.25%), the Iraqi oil company North Oil Company (25%) as a contractor and the Iraqi company South Oil Company acting on behalf of the state. Until May 2012, the project included the Norwegian Statoil ASA with a share of 18.75% (currently transferred to LUKOIL).

West Qurna-2 (WQ2) is a giant, one of the largest undeveloped oil fields in the world. The field is located in the south of Iraq, the planned annual oil production is 95 million tons over 13 years.

The customer of the IIS implementation project is LUKOIL Mid-East Ltd (LMI/LME), a subsidiary of LUKOIL Overseas Holding Ltd, created to organize WQ2 work. Currently, the main business center of LMI is located in Dubai, United Arab Emirates (UAE); offices in Baghdad and Basra, Iraq.

The WQ2 provides for the re-preservation of existing wells, the drilling of more than 500 new production, exploration, appraisal and injection wells, the creation of a water intake in the Persian Gulf, a water conduit and a reservoir pressure maintenance system, the construction of a rotation camp, access roads, power supply facilities, field and external pipelines, as well as the Tuba oil export terminal.

Currently, a number of major international tenders have been organized as part of the development of the WQ2, demining of the contract area has been ensured, seismic has been carried out, production drilling has begun, and the Pilot Camp rotation camp has been built for 170 people. Some of the historical wells were cleared and re-preserved.

The West Qurna-2 project is under the scrutiny of experts, market analysts, the establishment of different countries of the world. The project contributes to the resumption of Russian-Iraqi cooperation in the oil sector. Specialists from Arab countries, Russia and European countries participate in the development project, LUKOIL Overseas Holding is recruiting, training and training local specialists in Iraq.

The acquisition of such a large-scale oil field required LUKOIL Overseas to optimize the system of managing capital projects for the construction and development of fields. The focus on this production area is the key difference between the IIS LMI implementation project and all large-scale information system implementations carried out earlier by LUKOIL.

To build the IIS LMI, a service-oriented architecture was chosen, which is an optimal architectural solution taking into account the territorial remoteness of the project participants and integrated information systems. The use of best practices in integration and integration bus made it possible to build IIS on the basis of platforms of different vendors.

When creating IIS LMI, systems and IT solutions were used, which are the standard for both the largest international oil and gas companies and the corporate standard LUKOIL Overseas Holding Ltd. Some of the IT solutions were introduced into the project by other participants and international EPC contractors. In fact, all used systems meet the best-of-breed criterion and are guaranteed to ensure the development of IIS in accordance with the growing needs when promoting the Customer in the life cycle of field development.

Geographic scope of the project

As a result of the implementation of the project, the following participants in the development of the WQ2 field should be combined into a single information space and given certain powers to work in it:

• LUKOIL Overseas Holding Ltd. Corporate Center Russia-, Moscow
• Partners and investors in the WQ2 project - Iraq, Baghdad; Norway, Oslo,
• LUKOIL Mid-East Ltd.: UAE, Dubai office; Iraq, office in Baghdad, office in Basra, fishery near Basra in the WQ2 field;
• The world's largest engineering companies (EPC contractors): ENKA - Turkey; Samsung Engineering - South Korea, Technip - Italy;
• Suppliers of services, equipment and materials: Iraq, South Korea, Russia, Turkey, Italy, Pakistan, etc.

Organizational framework

LUKOIL Mid-East Ltd.:

• directorates - 10
• departments - 10
• services - 21
• departments - 34

Project Time Frame

September 2010 - Expected Project Completion - December 2012

Functional framework

The functional framework of the IIS LMI includes all activities during the development phase of a large oil and gas field related to the management of large capital construction, production drilling and geological exploration projects:

Planning and management processes:

• PL- Enterprise Planning

The main processes are:

• PD - Engineering support of oil and gas production
• ST - Hydrocarbon Marketing, Sales and Transportation Management
• FA - Engineering and technological support of capital construction and field development projects

Supporting processes:

• FM - Financial Management
• LG - Legal Support of Activities
• PO - Procurement Management of Goods, Works, Services
• HR - Human Resources
• RI - Information Management
• AC - Accounting Organization and Maintenance
• SY - IE and IT development and maintenance
• CS - Enterprise Service Management

Objectives and objectives of the project IIS LMI

The strategic goal of the project is to provide IT support in a short time:

• processes of creation of a new Organization/Company in the new Region;
• work on building and automating internal processes in the new Organization/Company;
• processes of formation and implementation of the Production Program of the new Organization/Company.

Project Objectives:

• automation at the level of the best world practices of the Company's main and supporting processes at the stage of construction and development of the field;
• providing remote management at the operational and strategic level of the Company's processes and production facilities (subject to strict information security requirements) from different parts of the world by introducing high-tech and mobile solutions;
• providing the Company's employees with reliable, complete and up-to-date information necessary for them to achieve their objectives;
• ensuring prompt inclusion/disconnection of EPC contractors and other external organizations from around the world in the corporate information space in accordance with certain requirements and powers;

Key Requirements for Project Performance:

• IIS-designed business processes shall take into account international rules and standards, which shall be followed by all international participants in the Company's field development and construction activities.
• It is necessary to ensure multilingualism of systems, regulatory and methodological, design and operational documentation.
• IIS reporting shall comply with all laws, rules and procedures of the region of presence (UAE, Iraq) and investment partners (Norway, Iraq, Russia).
• It is necessary to ensure that the optimality of the investments made in IIS to reimburse the costs incurred by the Operator (LMI) by the subsoil owner (Iraq) and the "alienability" of the Operator's IT solutions upon completion of the field operation/contract completion stage

Software used

To create an IIS, a set of best-in-class solutions was used:

• Operator Business Process Automation Platform - SAP ERP 6.0 (PS, MM, PM, CO, JVA, FI, HR, LE modules)
• Maintenance Processes - SAP ERP 6.0
• Budgeting Processes - SAP BPC
• Enterprise Information Management:
  • OpenText Content Lifecycle Management, OpenText Transmittal Management,

• * Microsoft SharePoint 2007;
• * ESRI ArcGis;
• Capital Project Management Processes constructions- Oracle Primavera P6 EPPM;
• Reporting processes - SAP BW, SAP Business Objects, SAP Crystal Reports
• Interface with Contractors - SAP SRM 7.01
• organization of teamwork and platform for implementation of enterprise services - Microsoft SharePoint 2007;

The IIS architecture is service-oriented:

• Data exchange between SAP modules is implemented using standard SAP RFC tools
• The SAP PI integration bus is used to exchange data between the accounting system and other applications of the integrated system.
• specialized integration solutions have been developed using SOAP for system integration:
• * SAP PS – Oracle Primavera;
  • SAP ERP – OpenText Content Server;
  • SAP ERP – WebTutor;

• * Microsoft SharePoint – Oracle Primavera;
  • Microsoft SharePoint – OpenText Content Server;
  • Microsoft SharePoint – ESRI ArcGis.

Equipment used and its characteristics. Technically, the implementation of IIS LMI is an implementation of the classic enterprise application cloud.

Main Data Centers

The main server and switching equipment is located in LUKOIL data centers in Russia and Europe.

The workstations of users of the system located in Russia, the UAE and Iraq are remotely connected to the cloud of corporate applications through the LUKOIL corporate data network (includes satellite channels and dedicated channels, as well as the global Internet).

There is a secure remote entry into the IIS from mobile devices in any region of the world in which it is possible to connect to Internet channels of information transmission.

Backup data centers. Two reserve data centers of LUKOIL in Russia and Europe are used to back up and ensure fault tolerance of productive systems. There are mirror copies of virtual IIS servers in the data center that are constantly updated. In the event of a force majeure situation in the main data center (accident, terrorist attack, military actions, third-party intervention, etc.), IIS can be launched on equipment in one of the backup data centers with minimal loss of transaction data.

Auxiliary systems

To ensure the access of the Holding's managers located in offices around the world to live video streaming from the West Kurna-2 field, a software and hardware complex was developed and implemented, the main components of which are:

• industrial video cameras adapted to the climatic conditions of the field;
• a set of satellite modems for transmitting a stream;
• a cascade of media servers (Erlyvideo, Wowza Media Server) for consolidating and processing a video stream using RTMP\RTSP protocols;
• a suite of apps for streaming video from desktops and tablets.

Project Activities and Deliverables

IIS LMI users:

• the total number of IIS users - ~ 1500 people;
• number of active users (working in daily mode) - > 500 people.

All IIS documentation and reference books are made in Russian and English. The international classification of providers and services according to the FPAL standard is used.

Business Process Design and Regulatory Methodological Documentation. During the implementation of the IIS LMI project:

• more than 100 business processes are designed and implemented in the system;
• 480 regulatory and methodological documents have been developed (in Russian and English).

ERP module. Currently, the systems of SAP ERP, SAP SRM, SAP BW, integrated into the IIS LMI, cover the full chain of activities of the enterprise - from the formation of a demand request to the formation of financial statements of the enterprise. In order for the chain to be continuous, interfaces are implemented both between SAP systems and with other systems that are included and not part of this project. Each department of the Operator Company has users of this module. Remote access to the IIS allows the Field Supervisor to display his documents in the system and the Manager on a business trip to perform coordination-related functions. The number of active module users is 360.

As a result of the implementation of the module, the Company's investment and business activities are regulated and transparent.

Corporate Project Management Module. The core for ensuring project management processes was selected POOracle Primavera P6, which made it possible to ensure the launch of the most popular functional areas: content management, timing, risk management, and by close integration with the SAP PS module, it made it possible to ensure the process of managing the cost of projects implemented in the Company. The number of active module users is 55.

The implementation of the corporate project management module has achieved the following tangible results:

• IIS is simultaneously conducting 14 projects with work plans containing 10,000 - 15,000 works with established and tracked interproject relationships;
• real-time monitoring of capital construction projects for the development of fields in Iraq is carried out by the simultaneous use of a project management tool by 30 dispatchers in offices located in different countries;
• facilitating the management of interdependencies between projects allowed the Chief Controller to review the schedules of all projects weekly and reschedule 10,000 to 15,000 project activities;
• optimization of the work of several departments of the Company for planning and monitoring capital construction projects in Iraq and Dubai (drilling, construction, supply, etc., during the stages prior to operation), as well as non-capital construction projects (interconnected sub-projects).

Information management module and document management. An important element of the integrated system being created was the system of document management and information management processes, both during the design phase and during the preparation, procurement procedures and contracting phases. Due to the use of OpenText Content Lifecycle Management, OpenText Transmittal Management, "seamless" integration with the ERP system was implemented in the process of preparing and agreeing contracts, in all document approval processes automatic control of approval dates was organized in accordance with the production calendar of working days. In addition, the process of processing design and technical documents received from EPC contractors was automated: processing and automatic routing of incoming transmittals, control of approval dates, automatic consolidation of comments and formation of outgoing transmittals in terms of design documentation. The number of active module users is 506.

Purchasing Procedure Management Module. In order to ensure procurement procedures, the implementation project included the implementation of the relevant functionality based on the SAP SRM solution. To implement the solution, the oil and gas industry classifier FPAL (First Point Assessment) was chosen, which is used to categorize purchased goods and services, as well as to classify suppliers. The solution made it possible to organize electronic bidding using a centralized platform for all contractors and service providers of the Company. The functionality of the system applies to: managing the register of pre-qualified suppliers; Competitive Purchasing via RFQ for competitive procurement through electronic two-turn tenders.

Currently, more than 1337 suppliers from 54 countries have been registered in IIS, 155 tenders and tenders have been held, 101 contracts have been concluded. The number of active module users is -21.

The main results of the implementation of the procurement management module were:

• reducing the time spent on routine procurement by standardizing the procurement process by switching to electronic document management;
• reducing labor costs for routine procurement and releasing highly qualified personnel to organize complex procurement;
• Increase competitive and transparent procurement by ensuring a level playing field for bidders and continuously increasing potential bidders by increasing the number of companies accessing SRM;
• storing information on each stage of procurement in the system;
• self-registration of suppliers in the LMI database through the company's website.

As a result:

• the purchase process has become faster by 15%;
• by 20% there were fewer errors in the establishment of documents;
• 15% less time spent on routine purchases;
• 50% increase in the number of registered suppliers.

Enterprise Portal. For the joint work of the Company's employees, a corporate portal based on Microsoft SharePoint has been introduced, which allows you to integrate and manage information within the framework of project teams, as well as has a number of specialized corporate services "Business Trip System," "Translation Accounting System," "Meeting Room Order," etc. An important part of the portal is the system of reporting and providing access to data of integrated systems. The Portal is the entry point for all employees of the Company. Depending on the role, the portal allows you to access the required set of information:

• data on the implementation of projects,
• information on achievement of key events of the Company and projects,
• status of execution of orders,
• status of conclusion of contracts and execution of procurement procedures,
• access to mapping information stored in the system based on ESRI ArcGis software,
• access to live streaming video from the field to be set up from more than 20 cameras,
• a list of daily and periodic reporting, including those from the reporting system based on SAP BW, SAP Business Objects, SAP Crystal Reports.

The number of active users of the module is 600 (Iraq, UAE, Russia).

Consolidated reporting module. The reporting system allowed to organize the collection and preparation of data for reports not only for making operational decisions in the framework of project activities, but also the preparation of standard reports for the Ministry of Oil of Iraq with minimal preparation costs by the contractor. The number of active module users is 6.

"Dashboard" module of the supervisor. This IT solution is a functional and technical integration of a whole set of information systems on different platforms, with different philosophies of work in order to provide holistic up-to-date information for specialists of any level: from line performers, to senior management of the company. As a result, the processes of collecting and providing data were formalized: weekly and periodic production reports, the progress of procurement and contract procedures, the execution of orders, indicators of the implementation of plans for the implementation of capital projects, as well as access to digital maps and live video streaming from the field, including tablet devices from anywhere in the world. Such platforms as: Livelink, Oracle Primavera, MS Sharepoint, ESRI ArcGis acted as information providers. The number of active module users is 470.

Integration module. The implementation of the selected service-oriented architecture with the ability to create a hybrid cloud for data reliability and security was carried out by:

• Integration tools recommended by software vendors, such as integration tire SAP XI, SAP RFC, OpenText LAPI, Oracle Primavera API
• development of own integration solutions, including using SOAP - employees got the opportunity to work in a single information space both from computers and, in a number of systems, from tablet devices.

Difficulties and risks that accompanied the project

The project was implemented in conditions under which the classical methodologies for introducing large-scale IP recommend stopping or completely stopping work.

1. LUKOIL does not have experience in implementing such large-scale projects for capital construction and field development outside the Russian Federation, with a significant share of involvement of international partners and contractors, under the close supervision of a foreign state (Iraq).

As a result, the absence of established business processes and regulatory and methodological information on the most important business areas at the field development stage.

Absence of a clear and complete production plan for field development and production requirements in general and by stages.

As a consequence:

• at the start of the IIS LMI implementation project, only a general directive work plan and requirements for its implementation were specified, which were detailed and specified before each subsequent stage. Such an approach helped to avoid long-term coordination during the system design phase and a large number of changes during the project implementation, realizing only the current functional needs of functional customers and end users of systems;
• infrastructure solutions were developed taking into account the Concept of placing systems depending on their criticality for business, the amount of stored data and the amount of traffic generated and consumed in different data centers, which made it possible to organize balanced reliable communication channels and provide access to data from any geographical point.

2. The IIS implementation project began almost simultaneously with the actual organizational formation of the LMI Company - the formation and improvement of the organizational structure, the filling of the organizational structure by employees.

As a consequence:

• ongoing organizational changes of the Company during the project, changes in the composition of responsible users, owners of business processes;
• different production cultures of business users (employees of LMI Company were "recruited" from different oil companies and did not have enough time for general alignment of terminology, development of rules for implementation of business processes).

3. Tight timing of the capital construction and field development project itself. As a consequence:

• large employment of the Company's top management directly with production tasks and allocation of a small amount of time for the IIS LMI project;
• strict requirements for the fulfillment of the deadlines for the implementation of the IIS LMI implementation project. To combat risks and manage the progress of implementation, the project applied the "incoming wave" method - a phased clarification of the requirements for the fixed IIS implementation strategy, which ensured the "closure" of the needs of business users, timely analysis and adoption of measures to minimize risks.

Project results and value to the company

In a short time, simultaneously with the process of creating and developing an oil company, a single information system was created to manage all the main and auxiliary processes of the company.

The implementation of the Integrated Information System made it possible to achieve the following results (the obtained specific performance indicators by processes - see the descriptions of the implementation of IIS subsystems):

• Organization and automation of internal processes in the new company, IT support of processes of creation in the new Region of the new Company.
• Providing the information resource with the production tasks and plans facing the Company.
• Within the framework of the project, regulations for the implementation of business processes were developed and approved in accordance with the corporate methodology adopted by LUKOIL and taking into account international practice (480 regulatory and methodological documents were developed, in Russian and English). Standardization of the Company's investment and business processes was ensured.
• In accordance with the approved regulations, business processes have been designed and implemented in the Integrated System (more than 100 business processes have been implemented, the total number of users of the system is 1,500 people).
• Multilingualism of regulatory and methodological, design and operational documentation is ensured;
• The system interface is implemented in English, reference book support is implemented in several languages.
• A system of delegation of authority is provided.
• The IIS reporting meets the requirements of the legislation, the region of the Company's presence and the rules and procedures of investors.
• The systems are integrated with each other, employees have the opportunity to work in a single information space from different parts of the world using remote access.
• High-tech and mobile solutions have been introduced, taking into account especially high information security requirements.
• Implemented IT and infrastructure solutions have a high level of security.

The total number of users of IIS LMI: about 1,500 people; the number of active users (working in daily mode) more than 500 people. Users work all over the world.