This paper explores the way data sharing can enable innovation in the E&P supply chain.
International pump supplier Framo has signed the first performance-based contract on the Norwegian Continental Shelf. Their partner in this project is Aker BP, one of the largest independent oil companies in Europe. Their SMART contract, signed in August 2018, sets an overview of concrete performance indicators that have a direct impact on the pricing of pump services. Using a shared industrial data platform, Framo receives live data from their equipment in operation offshore, allowing them to continuously monitor and improve performance. This paper analyzes the upsides and risks for both the operator and the supplier in this case and explains the data sharing technology that makes the project possible.
Live data sharing between operator and supplier revolutionizes the supply chain, enabling a transition from the traditional purchase of equipment to the purchase of performance of the equipment as a service. The Aker BP-Framo contract is the first of its kind to be implemented in the North Sea. It will set the standard for such contracts, showing how data should be shared between the parties, how performance is monitored, and how the pricing model may be set. Beyond changing a legacy business model, the Aker BP-Framo contract also demonstrates the necessity of data sharing in the industrial future.
This paper can function as a set of guidelines for other operators and suppliers looking to embrace a digitalized industrial future, disrupt the supply chain, and implement performance-based contracts.
Number of Pages
Cognite & Framo. 2018. The Future of the Field: Performance-Based Contracts Disrupt the Oil & Gas Value Chain. PDF Downloadable.
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