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29 January 2018
The Oil and Gas Authority (OGA) has published guidance on the development of Supply Chain Action Plans (SCAPs) in respect of all new projects, including decommissioning.
OGA will welcome SCAP submissions from January 2018 and anticipates that they will be included in all Field Development Plans (FDPs) and Decommissioning Programmes (DPs) from 1 April 2018.
SCAPs are a product of OGA's March report "Lessons Learned from UKCS oil and gas projects 2011-2016". Since its inception, OGA has consistently emphasised the importance of collaboration as a key element of the oil and gas industry. One of the recommendations in the "Lessons Learned" report was that the supply chain be involved in projects at an early stage, and that the operator work with the supply chain as part of one team with a single project-wide culture. OGA has also highlighted its Asset Stewardship Expectation that full value be achieved from licence assets.
OGA expects that all projects requiring FDPs or DPs will also have a SCAP which is to be submitted early in the process, prior to contract award, and probably during the "select" stage for those companies which "conduct projects in accordance with a standard stage gate process". OGA also expects early engagement with operators prior to submission of a SCAP, with early consultation and a sharing of the draft SCAP prior to submission. SCAPs have been created so that operators and licensees demonstrate effective working relationships across their supply chains for these projects.
The SCAP itself will be assessed on Engagement, Trust, Innovation and Quality, these criteria being explained in more detail in the Guidance and this assessment will take into account the earlier engagement with OGA. OGA will seek to respond to SCAPs within 60 days. Should OGA feel that a SCAP is incomplete or unsatisfactory, it will return it with comments and clarifications which are to be addressed with no limit on the number of times a SCAP can be amended following OGA comment or operator review prior to OGA endorsement. The outcome of the SCAP process will be included as part of the FDP assessment process and complement the DP process (with OGA providing advice and recommendations to OPRED on the SCAP covering "robustness of SCAP, cost minimisation, collaboration and reuse"). OGA will remain involved following contract award maintaining regular engagement with the operator to review SCAP commitments.
OGA has commented that other sectors have previously used the concept of SCAPs to successfully enhance value and encourage collaborative behaviour in new projects and so, in introducing SCAPs into the offshore oil and gas industry, OGA is highlighting the importance of relationships with the supply chain in maximising economy recovery of the UKCS and unlocking the full potential of the basin.
Bill Cattanach, Head of Supply Chain at the OGA said: "Supply Chain Action Plans provide a golden opportunity to drive behavioural change and promote a culture of active engagement between operators and the service sector, where it is accepted many of the solutions to enable MER UK exist."
At the end of the first year, feedback will be sought from industry and the process refined as necessary.
OGA's 'Supply Chain Action Plan Guidance' is available here. Workshops will be held in early 2018 to help operators structure and submit their plans.
For further information on this topic please contact Lorna Dawson, Judith Aldersey-Williams or Valerie Allan at CMS Cameron McKenna Nabarro Olswang LLP by telephone (+44 1224 62 20 02) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org ). The CMS Cameron McKenna Nabarro Olswang LLP website can be accessed at cms.law.
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