Business Closedown & Transition

Background

A national oil company in the Middle East announced it would enter into a new Joint Venture (JV) with a supermajor energy operator for the operatorship of its largest offshore oil field. This triggered the requirement for the transfer of all operational activity and personnel from the existing operating company to a newly formed JV business.

Challenge

The transition of operatorship involved the closedown of an established USD13bn business of 25 years and transfer of all personnel and operations, including 33 offshore locations and the largest water flood reservoir in the world. This is the first time that a project of this size and complexity of operatorship had ever been undertaken anywhere in the world. The programme was scheduled to take place over an extremely tight nine-month period during which the existing business would simultaneously continue operations while closing down and transitioning to the new JV. A major challenge was that existing employees would need to be managed and motivated in the face of uncertainty whilst maintaining business performance throughout and ensuring multiple stakeholder interests were respected in order for the transition to succeed.

The three key priorities were:

• • To protect and continue safe, reliable, and efficient operations until the end of the existing contract with the national oil company and to maximise value for the existing operator
  • To enable the national oil company and the new JV company to achieve a seamless transition that delivers effective operations from day one
  • To detach and deliver all business closedown/start-up activities across 14 key functional areas.

Solution

Our team were at the core of the Change Management programme working in partnership with the existing operator, the national oil company in the Middle East and a global supermajor oil company who was the JV partner. A Transition Agreement was created to provide a framework for the management of the programme. Under this, the team developed and implemented a Transition Management Organisation (TMO) to drive the closedown of the existing business whilst enabling the start-up of the new JV. Our team led the design, decision-making and implementation of the change programme which involved a core TMO group of 100 full-time and part-time members. The programme was complex and wide-ranging and involved:

• • Transferring 1,200+ people and their sponsorships across to the new JV
  • Leading the facilities closedown and renovation
  • Transferring 33 offshore sites plus onshore locations including multiple 25-year-old stock areas
  • Conducting an SAP carve-out/detachment, as well as managing the storing and transfer of over 100 TB data
  • Closedown of SAP system and transfer of 25 years of data in a way that it could be understood and used
  • Start-up of SAP system in new JV to coincide with the transfer of data
  • Novating or closing 1,000+ contracts and managing all contractors throughout the process
  • Managing the financial system closedown
  • Completing all brownfield scopes and handing over planned scopes
  • Handing over all business processes and procedures
  • Protecting all existing Intellectual Property
  • Managing the PMO and technical leads of 70+ people

To ensure a smooth and successful closedown and transition, robust processes and frameworks were implemented and our bespoke change management tool (TMT) was deployed to control and drive the programme. The operating rhythm was designed to ensure efficient and effective communications, project management and tactical delivery. This enabled the team to maintain situational awareness, assist in mitigating risk, and informed high-quality decision-making throughout the delivery of the closedown and transition.

The TMO was set up to include Directors, Managers, Functional Leads, and, critically, 14 Transition Functional Teams containing the subject matter expertise to deliver individual transition scopes. The TMO led the identification, coordination, prioritisation and development of Functional Area activities and managed an integrated plan across 14 functional areas with complex scopes. These covered critical business functions including Field Operations, Engineering & Construction, and Drilling & Wells through to Finance, Supply Chain and Human Resources.

The TMO managed the interface between all stakeholders. This involved the efficient coordination and control of enquires, questions and requests for documents and information, and amounted to the transfer of over 100TB of data and nearly two million documents. The structured and controlled way in which the programme was managed also meant that the TMO was able to deliver the closedown and transition significantly below budget.

Outcome

Within the tight nine-month schedule, all objectives were delivered on time and under 50% of the budget. This was the first time that a project of this size and complexity of operatorship had successfully been completed anywhere in the world. Throughout the programme, existing field production and operations were maintained safely while income and value generation were maximised for the outgoing operator through to the end of contract. Over 1,200 people were transferred across with a seamless transition of all onshore and offshore operations allowing the new JV to generate value from the start. The robust processes, procedures, and operating rhythm of the change methodology and our bespoke change management tool (TMT) enabled such a large and complex programme to be managed by a small core team. The success led to this model being adopted in other areas of the national oil company.