The ROGTEC Interview: Lenar Nazipov, Director General, TAGRAS-HOLDING LLC
Each year there is greater implementation of modern digital technologies at major oil and gas companies. The market players highly appreciate the various economic benefits and notice that digitalization is an effective way to increase competitive advantage. However, the professional community does not yet know how to best employ digital tools – and it is an untrodden path for the majority, and each company accumulates its own practices and approaches to the development of business processes and information systems supporting digitalization.
How should one walk this complex path? You should make it clear what kind of outcome is desired. You should make up a plan, accumulate production data, and, as much as possible, “sort all things out”. The more sorted your data is, the easier the process management shall be. TagraS, as a major oilfield service holding, which abides by this simple principle. Today, it is leading the path in the first flight of digitalization, using not only the best of Russia’s practices, but also on its own project work experience as well. The Holding’s drilling division –Tatburneft has become the “leading swallow” in this regard. They are the first company, in the Russian oilfield services market, to introduce a business model built on digital solutions. To find out how drillers’ experience helped them sort out their approaches to digital transformation of the “TagraS” management system and what the perspectives of further development are, we have interviewed the Director General, Lenar Nazipov.
Lenar, please tell us how the process of digitalization is going on at your enterprises? What were your first steps and what have you been able to achieve as of today?
Now, the Company is implementing a large-scale “Program of Complex Digital Transformation of the TagraS Holding, which is a number of interrelated projects, comprising all of our divisions. The prerequisites are very simple: TagraS is a modern, dynamically developing company, enhancing its efficiency due to advanced technologies. The existing economic realities and the market behavior demand our mobility, flexibility, ability to quickly make qualitative managerial decisions and to meet customers’ needs. So, our goal is to enhance our efficiency through the use of modern technologies. That is why that Transformation Program was initiated and launched.
The Program of Transformation at Tatburneft has become the basis for large-scale changes in the Holding. The complex information system has become its key driver where various processes of production, procurement and management in the oil field service company have been implemented based on advanced 1C products. Tatuburneft provides a wide range of drilling services, both the “turnkey” and the “segregated” services. One should say that the drillers are not yet finished with their jobs, they still have a lot to do, although the key goal has been already achieved: together, we have elaborated a unified strategy, and developed scenarios and regulations for development, introduction and service maintenance of complex systems, and we now clearly path to our ultimate goal. The value here is not in a developed solution, but in the development of a new production culture.
Was this digitalization in Tatburneft caused by any production necessity?
Exactly. As long as the drillers had a single major customer, it was possible to work according to formed regulations. But today, one of the key challenges of the Holding is to enhance its positions in the open market, to attract, as much as possible, new clients. And this moved Tatburneft to reconsider its business model. New customers imply new requirements, new approaches to the organization of drilling, monitoring and planning. Therefore, we should increase the flexibility and manageability of the company, to be able to adjust us to the client’s agenda. What is required for this? Receiving the operating and reliable information about the task and resources. Interpreting it equally with regard to every participant. Predicting, operating decision-making, controlling costs. Building internal corporate communication. Any company’s effectiveness 100% depends on its communication efficiency.
But does one need such large-scale reforms? Or were your existing IT-capacities not able to cope with new tasks?
The business model and infrastructure, that existing at that time, made these tasks unachievable. Tatburneft had the same IT infrastructure as the rest of the oil field service companies have had – segmental software products, “unlinked” data streams, a variety of redundant operations and inefficient resources. There was no integrated system between the processes. As a result of this, we had difficulties in the interaction between various divisions of the Company. Besides, drilling is a technically complex business, influenced by a great number of factors. You have strict regulatory frameworks, changes in the operational plans, and even weather conditions. And, of course, no one has mitigated all the errors within the human factor.
What, to your mind, is the main point in the digitalization of production?
The main thing is to correctly influence the mentality of people who are a part of these processes. To let them believe in progressive methods of working. When we introducing new tools and approaches to working, we teach a person to not only think about his/her working pace but remember how to interact with the neighboring subdivisions. Colleagues are not only your neighbors in an office or a building floor, they are a large group of people, and together, we are one team. We developed a new ideology and culture at our enterprise which helps us move forwards. In the long run, technologies are just tools that do not guarantee us anything. To be able to use them efficiently, new principles have been applied in the business model itself. I believe, it is insufficient to simply introduce any research works and technological solutions. The development of a company is only possible in its totality, which is why we work on the complex informatization of our production operations. This enables us to not only solve some current issues but create solid foundations, on which one can deploy any tool and principles of digitalization, and which, I’d like to stress it here, have already been in part implemented.
Does that mean that already today you can use capabilities provided by the artificial intelligence, robotization, BigData, predictive analytics and other breakthrough technologies?
Let’s put it this way – there are no obstacles for this now. The specifics – of what we have implement and to what end we do that – is reflected in the Holding’s Program. The roadmap determines the priorities and timelines for these jobs, while the architecture deals with specifications for functionality. In essence, we are now walking on a paved pathway: The Tatburneft Transformation Program was started at the end of 2016, and the introduction of the complex information systems have become its “locomotive engine”, where all of our functional subdivisions are involved today. We have a number of infrastructure projects behind us, which were aimed at large-scale organizational transformations with the use of information technologies.
And where did you begin?
We started from the complex analysis, audit, inventorying our resources and processes which we had at that time. We carried on investigation of existing processes, and compiled an objective process model, gathered and sorted all of the production data, including the normative base. Oil and gas service is very strict in terms of compliance and regulations. There are complex procedures of management and interdependent production chains as well. As you see, the innovative development can only be integrated here. It is necessary to develop the whole of the enterprise at once, involving all of its functions. Any “piecemeal” changes, implementation of information technologies without restructuring the business model would yield no system effect, it could be just “a drop in the ocean“.
How did the Company’s people perceive the organizational changes? The oil and gas service is so conservative
It is not so much conservative as more dependent on standards and regulations. As for the changes, it is not enough to elaborate a strategy; conditions should be created for them. One cannot just say: guys, let’s live a new way and wait till the changes come by themselves. We have made a complex job on transition from the methods that have become conventional for drillers to innovative advanced approaches. I suppose, the most valuable thought we have arrived at, and which has become a foundation for the Tatburneft Program, is that it is the production operations that we should improve first of all. Usually, it is a common practice to evaluate the efficiency of an enterprise through its economic indicators – but they are just formed as a result of production activity, as such. This is the basis of any business. To sell anything, you should first produce something. Therefore, the more we invest into production operations, the better the whole of mechanism would work. That is why, while carrying out the audit, special attention was paid to the people who work “in the field”, as it’s called. We have found that a drilling foreman has to have not less than 25 hours per day to be able to comply with all of the accumulated procedures and requirements. After we described all of the production chains in detailed way, we understood that too many people are involved, who in one or another way have impact on the transferred information. After we asked ourselves a question how to sort out all of those processes and make the production information unified, transparent and comprehensible for every one, we built a new process model. And even this intention alone is considered by me as our achievement, as this was the first confident step towards the complex systematization in managing the company. An important task at that moment was to find an appropriate partner with competencies that we needed.
Who was the contractor of your project? What kind of criteria did you have when holding the tender?
We considered several IT-companies with the experience of creating Enterprise Resource Planning systems (ERP). The vast majority of them do not offer us some sort of ready-made solutions with a low degree of customization. It is clear that every integrator and vendor has their accumulated experience, it is always more convenient for them to walk a beaten track, but that brings us to the question if that track is appropriate for us? We kept telling them: we do not need a separate dispatch system; we do not need a separate supply system, no separate transport order management system! We need a unified platform where both the dispatch system, and supply system, and pricing system, and all the rest would be involved. However, in reality, we found that not many were actually ready for that task.
Really? It is believed that major IT-integrators enjoy non-standard tasks
The IT market is not homogenous. It includes companies that are busy with trading software products and solutions, but there are other types of them, much fewer in number, where they know how to link all the systems into unified one and work for achievement of definite targets. Prior to the launch of the Program, our departments, services, enterprises were isolated in terms of communications flow. Every unit worked for its own outcome, taking no account of specifics any neighboring subdivisions had. It was our task, our plan. The task of the transformation program has been to bring the processes of the Company’s management to a new quality level, to make them interrelated. As a result, we made our choice of the ITPS Company grouping who attracted us with, first of all, their experience specifically in the oilfield service sector. That was one of few candidates who actively welcomed the idea of complex digitalization, whereas we communicated with other potential partners, it looked to be a kind of “stumbling block” for them. To work with us, ITPS engaged all the required resources. Part of the organizational issues was directly discussed with the company grouping’s head: he has been accessible which just demonstrates a high degree of mutual understanding and trust between the partners.
What would you advise to other companies who would like to enhance the efficiency of their business with the use of modern technologies?
My advice for them would be as follows: start from the processes and information flows. To sort and tune up the interrelation of processes, you should create them. At that, we need the processes that are linked to specific business goals. I asked the drillers: what is your product? The answer was: well drilling. Well, and what is the value of your product for a Customer then? He might not only need a well, but want that well delivered quickly and with definite cost parameters? Let’s analyze these interests and proceed from them. When you start talking with a Customer you eventually get a list of requirements, and you are then making your plan based on them. All of this was laid in the foundation of the process model which Tatburneft forms together with its partner. The processes were divided into three big blocks: the managerial processes, production operations and supporting services, with functional modules elaborated for each of them, with specification of regulations and areas of responsibility. After that we got the first business effect: while forming the unified model of the business processes we built a mechanism of the Company’s further continuous development which we are going to make use of. Combining the sectoral expertise of ITPS and the potential of modern process platforms, we have created a complex sectoral solution. We chose the 1C products as the basis, which have been developed and integrated into a unified highly productive environment. Detailed target models of business processes and their regulations were implemented as part of this solution, including all of the reference documentation, and mutually integrated functional modules have been implemented, which all makes up a complex IT system.
How did the solution proved itself? Was it equal to your expectations?
More than that. The Company received a functional tool that enables us to conduct pricing, and adaptive production management, HR management, financial management. The accurancy and value of the information have increased, the planning processes work better now, and fixed charges have reduced. Usually, it may take one years to handle such problems… It is clear that drillers did not have that amount of time. The Holding needed an outcome, and to make ourselves more attractive in the eyes of our Customer we were given just three years. Today, looking back, I can say it: yes, we have made it. It took Tatburneft just one and a half years to increase the share of its external customers 2 times, and now this share amounts to half of their earnings. In many ways, this has become possible exactly due to the changes made in the management system i.e. due to the outcomes of the Program.
How are these approaches implemented across the Holding?
We carried out our investigation again, not in just one of the enterprises but in all the units. We used TagraS Business service, which just deals with IT-support to all of our information systems. We implemented the system using the experience of Tatburneft. The Company’s specialists learned how to support complex solutions and how to provide their aid in replicating and further supporting this among the other divisions. The audit let us see the visual chart of the processes and the information systems. Having that chart as the basis, in cooperation with other divisions, we have been expanding a program of complex digitalization in each of them. We do not come to each division with some local solutions; we bring our ready-made principles, involving the processes and the architecture. Programs like this, implemented by Tatburneft, have been initiated in some other divisions, and one and the same developed scenarios has been applied there: we usually start from the development of a process model, consolidating and standardizing all the production data, including the regulatory documentation, we start from the appreciation of the ultimate target and our outcomes. And moving on, we deal with elaboration of complex systems.
Are the systems equal in all of the divisions?
Not entirely. Part of the solution can be replicated, while other parts cannot. There are some blocks related to the specifics of the business – they are individual for each division. Overall, a unified solution has been developed to support and manage the related processes. We do take the management experience as the basis, not the modules as such. We have a certain method – of implementation, support, and commissioning of the systems into operation. There was no such thing before. Now, thanks to our experience with Tatburneft, we have a holistic managerial tool kit: a set of approaches, tools and patterns which are applicable for everyone. It is because we strive to popularize our accumulated approaches. We have learned to create such systems and we can manage the process of their creation. What’s more, we want the Russian oilfield service market to add our experience to their arsenal. In order to make life easier for those who are engaged on drilling rigs.
Did you manage to improve the quality of life of the ordinary field personnel & drilling foremen, using these technologies?
Yes, and we are truly proud of that! Just try to imagine that such a process: on a shift basis, each drilling foreman had to twice submit reporting information – first, when he talked on the phone with a drilling operations company, and for the second time – writing that report for a management company. In essence, those would be two different reports and duplicated work both for foremen and for economists, labor department employees, and analysts. We have abandoned such practices. We have arranged that the input of information would be carried out once only, by a person who is the source of that information, that is, a drilling foreman. The report prepared by him has become a single primary document now. The data from the report are now used at all of the following stages; the operations are transparent for each participant of the process, including the Director. Alongside with that, in the course of the reorganization, we got rid of several interface levels, the number of participants involved in the acceptance and adaptation of data has also been reduced. There is now no need to maintain that double stream of data from the drilling rig to office. This has been a great step forward, both for operations and for the analysts. It is important that this has been recognized by the operational people themselves. Indeed, what is a drilling rig as such? It is round-the-clock labor without days off, holidays or vacations. This is non-stop life! Our most valuable resource is time. It is not good to waste it, as it is always short. You should earn every second. Each NPT means losses. People work in really harsh conditions and with any . We want every economist or supply agent, who sit in their offices, to never forget how important the accuracy of his/her decisions is, which may have impact on the well construction job quality. That is why, when we have new young specialists coming to us to work in our offices, we take them to a drilling rig. We do not do that in summer time, when it is dry, nice and warm, but in late autumn, or early spring. Preferably, taking them out in the real cold and slush. And people start to realize where they really work.
Lenar, thank you very much for sharing your views. Could you say a couple of words to the companies who are just going to start on this path of digital transformation?
I hope that our example will encourage many. Digitalization is not just a fashion trend but an essential tool. Three years ago, we started in this direction and we do not regret it. Back then, many, including ourselves, thought that we were embarking on something sophisticated, unknown. Now, when we look at the retrospective and see the actual results, I see that we have done what had to be done. One should not be afraid of any changes and starting large multi-stage projects. Development is always ongoing!
