Supply chain action plans mandatory for oil projects

Oil and gas companies will be obliged to develop supply chain action plans (SCAPs) to ensure they work better with the UK supply chain. 

The change, introduced this month by the Oil and Gas Authority (OGA), aims to help firms reduce cost and time overruns in the supply chain and increase value.

SCAPs will need to demonstrate that an operator has developed a comprehensive contracting strategy, and will be evaluated by OGA based on how the plan addresses the issues of supplier engagement, trust, innovation and quality throughout the life of a project.

As of this month, OGA will accept any SCAP submissions, and submissions will become mandatory for all new field development plans and decommissioning programmes from 1 April 2018. 

OGA introduced the measure following a previous report by the agency that found a significant number of projects carried out by the UK supply chain were delivered late or over budget.

The change is also one of the last projects to be introduced as part of the Wood Review Implementation, which followed the publication of the Wood Review in 2014 that looked at how to maximise the economic output of North Sea oil as resources become depleted and harder to access.

Bill Cattanach, head of supply chain at the OGA, said: “[SCAPs] provide a golden opportunity to drive behavioural change and promote a culture of active engagement between operators and the service sector.”

He added it was widely accepted that many of the solutions to the government’s strategy to maximise economic recovery from the continental shelf – dubbed MER UK – lie within the supply chain.

A pilot by a number of UK oil and gas companies found that early collaboration with the supply chain could significantly reduce costs through process efficiencies, reducing administration and finding alternative methods, the OGA said.

OGA has published guidance on creating SCAPs and will be running workshops early this year to help firms understand what it expects from these plans. 

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