A continued shale oil development requires oil producing regions like Middle East and Russia to reinvent or “Digitally Transform” their industries. Like everywhere in the world, the challenge is the role and motivation of Senior Management to lead the change. Since refining and petrochemical companies have been hesitant to adopt newer organisational and collaboration concepts, the reinvention options are almost limitless.
We think that the actual structure of a Middle Eastern Refinery of the Future will evolve into one that is processing-wise similar to those of today - this topic we will discuss next month; but, it will have a very different management structure, local personnel, and information management models and systems than those of today.
Personnel to Lead the Transition?
Post-Digital Transformation, there will possibly be fewer Middle Management positions. Therefore, finding people to lead the Digital Transformations will be challenging for Senior Management.
Middle Management positions that remain will be Leader/Facilitator positions, and not Command and Control positions. Command and Control personalities will have difficulty transitioning to Leader or Facilitator personalities. Leaders/Facilitators measure outcomes - younger generations tend to be more collaborative and thus have more opportunities.
Move activities in places where people want to live?
One organisational possibility is to operate all the refineries from a central location.
- Oil Pipeline Operators proved this works decades ago when they operated multiple pipelines from Central Control Centers. Pipeline Operators recruited and retained higher quality personnel and ensured consistent operations across all pipelines. The savings and improved economic performance were very significant.
- Offshore Producers did the same starting in the late 90s.
- Refining in the US is in the process of demonstrating this.
Similar realisations and practices are continuing to evolve in other industries. Companies are locating their Technology Development Centers in cities around the world that have universities and think tanks to provide broad access to people with needed skills like Silicon Valley. Some Middle Eastern countries are already employing this concept.
Create Operational Centralised Centers of Excellence (CoE)?
For the Middle East, the best practice may be to have multiple Centralised Centers of Excellence responsible for operations and maintenance of various functions like Process Operations, Product Sales and Marketing, Supply Chain (MRO and Feedstocks), Outbound Logistics, HR, Accounting, Equipment Reliability, IT Ecosystem, etc.
Personnel in newer CoEs actively participate in or do the work in the field.
- Each Center of Excellence
- Staff: Key Knowledge Workers from all Sites for that Specialty and one IT Facilitator/Liaison person.
- “Art of the Possible” (Leading Enhancements, <5% of companies do it this way)
- Best Practices (~50% of companies do it this way)
- Possible Improvements
- As-Is
- To Be: Future State
- Transition Plan:
- Organise Opportunities into small projects to be implemented using Agile Concepts.
- Each CoE Team should make Low Hanging Fruit Type Improvements, automate documentation preparation, and perform training.
- As appropriate, each CoE should apply the changes to other sites by creating an Ecosystem for each site and applying the nuances for each site.
- Form a Collaborative Continuous Improvement Team
Implementing Significant, Cross Collaboration Transformational Team Opportunities in an existing organisation structure with rigid policies, procedures, organisation structure, and IT systems is much harder.
One cannot change the game by following the rules of the existing game.
We suggest the following areas that need special focus:
- Viewing people as key value of the company rather than assets
- Going digital; but this way is not the only possible option for all refineries espically independent ones – they should have the funds to invest and strong reason to do so
- Making rational but quick decisions based on market situation
- Optimisation
Refining companies could implement broader transformational improvements as part of its MegaProjects.
Euro Petroleum Consultants is a technical oil and gas consultancy with offices in Dubai, London, Moscow, Sofia and Kuala Lumpur. Euro Petroleum Consultants also organises leading conferences worldwide including OPEX MENA 2020 – Excellence in Safety & Operations - which will take place in Bahrain from 31 March till 2 April 2020.
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