Managing Successful Offshore
Modularized Fabrication
— Through Cost Effective Procurement Strategy
Gu Hong, COOEC
April , 2011
CONTENTS
Offshore Project Management

Need Analysis

Sourcing in China

Procurement Risk Mitigation

2
Who We Are
TANGGU
QINGDAO
COOEC is one of the largest EPCI contractors for offshore oil & gas
industry in the Asia Pacific area.
CNOOC owns approximately 60% shares of COOEC.
COOEC has also entered new business segment in the fabrication of
modularized plant and drilling rig.
3
What We Do
Products
Services
 Conceptual Engineering
 Jacket
 FEED
 Topsides / Modules
 Detailed Engineering
 Shop Drawing
 As-built Drawing
 FPSO Topside / Modules
 Subsea Pipeline
 Procurement
 Subsea Cable
 Fabrication
 Mooring Structure / system
 Load-out and Sea fastening
 Terminal Facilities
 Offshore Transportation
 Pressure Vessel & Skids
 Offshore Installation
 Site Hookup & Commissioning
 Maintenance and Renovation
 Project Management
 Jack-up Drilling Rigs
 Modularized Plant
4
Historical Development
我国第一个对外合作油田
Self-Elevating Jackup
designed by China
First oil field cooperated
with oversea partners in
1982
1. Water Depth
Increased from
1. Increased E&P
In 1966, the first steel
offshore platform / module
was built in Bohai Bay
A milestone of China
Offshore Engineering
China began to
design and fabricate
jack-up rigs by
herself
Industry development.
After establishment of
CNOOC, China
offshore Oil & Gas
engineering industry
began to see great
development.
•International
Standards applied
•PSC Introduced
1950s/1960s
1970s
1980s
activities in South
China sea
2. Water Depth
Increased to 120m
3. International
cooperation
further enhanced
1990s
100m to 300m
2. Module Size more
than 10000tons
3..EPCI capability of
large complex projects
4..International Quality
and HSE code
Executed
2000 - Present
5
One of Key Factors for Successful Project
QINGDAO YARD
Choosing the Right
Module Yard to Deliver a
Challenging Project
The yard has experience with EPCI contract in the Asia Pacific region for oil & gas industry.
6
 Quay Line: 1,645 M
 Quay Water Depth: 10~12.4 M
 Total Area: 1,200,000 M2
 Annual Fabrication Capacity: 270,000 T
 Dock: 420 M * 110 M * 13.9 M
7
HSE
The HSE are always the weakness in our management
which need continuous improvement.
—— Fu Chengyu, CNOOC Chairman
Prevention First
Process Control
Continual Improvement
22.9
Award of “Excellent
Contractor”
13.36
12.2
High HSE
Performance
6.4
1.1
HSE POLICY
0.55
0.34
2006
2007
Manhour
(Million)
0.18
2008
0.12
0.07
2009
2010
LTIR
8
Quality
EN ISO 3834-2:2005 Welding Certificate
HSE
QUALITY
PROGRESS
Environmental
Management System Standard:
ISO 14001:2004
WELDING PERFORMANCE
Quality
Management System Standard:
ISO
9001:2008Health and Safety
Occupational
Management System Standard:
OHSAS 18001:2007
9
Performance Record
QUANTITY
ARCO
BP
CACT-OG
CSPC
HUSKY Kerr-McGeeKODECO
CHEVRON
ENI
CNOOC
GUSTO
HHI
PHILLIPS SAIPEM
100+
Jacket for Fixed Platform
100+
Topside for Fixed Platform
9
Single Point Mooring System
10
FPSO
63
FPSO Topside/Modules
4
1,234
SHELL TECHNIP TEXACOTOTAL WORLEY
Category
17
200+
Jack-up Drilling Rig
Subsea Pipeline (km)
Modules for Mining Plant
Equipments Skids / Modules
10
CONTENTS
Offshore Project Management

Need Analysis

Sourcing in China

Procurement Risk Mitigation

11
Understanding Project Clients' Requirements
The difference between success and failure
consists in communicatiion.
Since 1982, all the upstream projects for
China offshore oil & gas development
adapted international codes & standards.
Multi-level
& -facets
Channel
Multicultural
Communication
Clients’
Need Analysis
International Standards:
Communication
Protocols
&
Processes
ISO、API、ASME/ANSI、AWS、
IEC、ASTM、DNV、ABS、BV、
SOLAS… etc.
National Standards:
GB、Q/HS、SYT、CCS…etc.
Teamwork
12
Understanding Project Clients' Requirements
Correspondence
Memo/File Transfer
Regularly Scheduled Meetings
Technical Exchange
Regular visit among top
management
Communicate,
Communicate,
and Communicate!
13
CONTENTS
Offshore Project Management

Need Analysis

Sourcing in China

Procurement Risk Mitigation

14
Sourcing in China
More Material and equipment used for Modules now
can be produced from China
Technical Comparable of China Produced material &
CHINA
products
Cost and time effectiveness for China Produced
Material/Equipment/Products
15
Benefits in Sourcing China
Reliable quality
Competitive cost
...
offers strategic long-term benefits
beyond cost savings
Ontime delivery
16
CONTENTS
Offshore Project Management

Need Analysis

Sourcing in China

Procurement Risk Mitigation

17
Procurement Risk Mitigation
DESIGN
DESIGN CHANGES
DESIGN STANDARDS
Mainly occurs in early stage of a
project, which could affects the
construction schedule and material
quantities ordered
Once the standards
determined (API, JIS, etc.), the
range of the vendors also
determined
Asks for quick response from client
and vendor to contractor to
minimize the procurement risks
Try to use Chinese Standards
are the ultimate goal for
Modularization in China
18
Procurement Risk Mitigation
MARKET: Maximize the Local Market Potential
LOCAL MARKET
Easy to meet Schedule requirementnt
GLOBAL MARKET
Approved vendors
from client
Low Cost
Good Service
DEFECTS:
Approval
from client for
vendor and products quality.
Standard deficiency.
Quality assurance
from client
DEFECTS:
Communication
and
cooperation deficiency
Schedule requirements
hard to achieve
19
Procurement Risk Mitigation
PAYMENT: Affects
not only cost but also
procurement activities
period and procedure.
Reimbursement
Text in
here
Unit
Text
Ratein
Vendor
List
here
Limits the local market
sourcing, affects the pro
schedule
Cost Plus /
Provisional Sum
EPC CONTRACT: The Base of all Procurement Activities
20
Procurement Risk Mitigation
Cooperation
With
Client & Vendors
Vendors active
participation
Promotes efficiency and understanding
Other
Factors
Clients
requirements
Law Term
Risks
Anti-dumping Duties
Import Limitations
Directly sent to vendors without differentiations
21
China Sourcing Project
22
Closing Summary
CHALLENGES
 Advanced project management and
coordination interface
 Logistic and technical challenges
Confidence in local vendors
 Foreign and Chinese standards
OPPORTUNITIES
 Accelerated shift of fabrication project to
China yard from Overseas yard; Clients are more
cost conscious
 Global Economic is waking up and Capex is
increasing
 The improvement of hardware condition and
human resources enables Chinese companies to
get more projects. In this way, Chinese scouring
steps into a larger stage.
23
THANK YOU!
ADDRESS: No.1078, Dan Jiang Road,
Tanggu, Tianjin, 300451, P.R.China
CONTACT : Mr. Li XiaoWei
TEL:
+86 22 6690 8879
FAX:
+86 22 6690 8899
WEBSITE: www.cnoocengineering.com
E-MAIL:
lxw@mail.cooec.com.cn
ADDRESS: No.492, Lian Jiang Road,
Qingdao Economic & Technical
Development Zone, Qingdao, 266555, P.R.China
CONTACT : Mr. Shen Weihe
TEL:
+86 532 8675 818888128/8228
FAX:
+86 532 8675 8108
WEBSITE: www.cnoocengineering.com
E-MAIL:
swh@mail.cooec.com.cn