The document discusses strategies for converting maintenance costs into savings for oil and gas assets. It addresses: 1) Conducting a critical assessment and evaluation of maintenance plans to identify areas for cost optimization and ensure returns on investments in assets. 2) Planning for financial consequences by examining contingency plans to extend asset life and delay upgrades, as well as identifying maintenance issues before they become costly problems. 3) Leveraging tools like predictive analytics and inspections to improve maintenance and prolong the useful life of structures, ensuring sustainability and higher returns.

1. © 2016 Cairn India Limited
Converting Maintenance Costs to Savings
Swapnil Sharma Operations Manager Cairn India Ltd

2. 2
AIM Video

3. 3
Agenda
Converting Maintenance Costs to Savings: Critical Assessment and
Evaluation to Ensure the Management Maintenance and ROI of your Assets
Applying best practice for your critical assessment: Evaluating what is best
for the size of your plant, asset and your strategic plan
Planning for financial consequences: Highlighting anomalies in your
repetition plans to identify affected areas before they become problematic
Fighting time and resource: Examining long and short term contingency plans
to extend the life of structures and prolong upgrades
Re-establishing the importance of powerful prediction and inspection tools to
ensure sustainability and higher returns on your investments

4. 4
Declining energy prices increasing other cost of living
This outcome has puzzled
many observers, who had
believed that oil-price
declines would be a net
plus for the world
economy
0.0
10000.0
20000.0
1990 1995 2000 2005 2010 2014 2015 2020 2025 2030 2035
CONSUMPTIONIN
MTOE
YEAR
World Energy Consumption
Total Oil & Gas Total Energy Energy India

5. 5
Challenges
Situations Impact Resolution
• Cash constraint
• Declining asset uptime
• Performance
measurement &
governance
• Expectation to
“achieve more with
less”
• Misappropriation
fuelling losses
• Employees’ become
less engaged
• Random cuts and
slowed growth
• Instability in achieving
prod/rev targets
• Capitalize ideas &
leverage best practices
• Thorough investigation
to thwart further losses
• Low Cost efficiency &
repetitive processes
• Employees perspective
• Integrated business
planning approach
• Asset reliability and
integrity management
• Governance framework,
defined operating model
to gain consistency
• Forensic analysis of
tech/ops/financial data
contract negotiations
• Compress duplicate/
over/ and erroneous
payments/works
• Embed and assist with
Communication
Stay ahead of the curve

6. 6
Critical Assessment and Evaluation
Management Information System
Budget Analysis
• Spent Analysis
• Avenues of Cost optimization
Old Vs New Success Factor
• Size Speed
• Role Clarity Flexibility
• Specialisation Integration
• Control Innovation
Low oil prices : effects of
inefficiencies
Maintenance Strategy
Strategy to OEM Recommendation
Enhanced Maintenance Performance
Focus on production over exploration
• Expenditures
• Cost Effectiveness
• Tactical Operating Performance

7. 7
Best Practices: Management Information System
Periodic Business
Assurance Audit
Consolidated Statement
Supplier and contractor
management
HSE Incidents Reporting
and Follow up
Integrated Business
and Activity Planning

8. 8
Budgeting Process
Objective EnablerSteps
Work Program
- Commercial /Execution feasibility
Spent Analysis
• Activities / Program quantities including Production-
Injection-Downtime- Resources
Budget Challenge Session
• Opex , SBU Financials- w/assumptions & risks
Detailed Execution Plan with
milestones
• Opex Projects
Avenues for cost Optimisation
• Consolidation , roll up
• Consolidated Financials (with sensitivity)
Submission & Approval
-
Roll-Out Defined needs and wants
1
2
3
4
5
6
7
Predictable Volumes
Regulatory Requirement
Flexible and Responsive But
Cost Effectiveness is essential
Operational Efficiency
Translating to Production
Requirement
Identifying important
interface areas
Barriers
Technological
Change/Contingency
Core Competencies
Strategic Role of Technology
Clear & Mutually Acceptable
Goals
Knowledge Strategy
Cost Consciousness, Global
Market
Competitive priorities

9. 9
Maintenance Strategy: diagnosis and treatment
Recurring problems with equipment
Budget blow-outs from costly fixes
Unplanned downtime
Using equipment that is not performing at
100%
Risk of safety and environmental incidents
Risk of catastrophic failure and major events
Strategy sticks to OEM recommendation

10. 10
Strategy to OEM recommendation
Only – a starting point
OEMs have never maintained
in the field
Highly priced Spare parts
Solution “One Size Fits All”
Create own optimized strategy
Meaningful, Reliable
Information
Creative,
Doable
Alternatives
Clear Values
and Tradeoffs
Commitment to
Action
Commitment to
Action
Logically
Correct
Reasoning
Logically
Correct
Reasoning

11. 11
Enhanced Maintenance performance
Tactical factors
•Prequalification &BEC
•Visibility to contractor and supplier
risks
• Site Management & Performance
Evaluation
Supplier & contractor relationships Mgt
• Major Cost Driver
• Interdependency
• Production Optimization
• Economies of Integration
Efficient Cost ManagementAsset Reliability & Integrity
•Focused predictive maintenance
•Better STO
• Gated RFSU
•Data Analytics
Strategic factors
•Siloed design architecture
• Decision governance
•Performance management
•Standard policy & enforcement
An effective operating model
•Leadership & maturity
•Strategy framework
•Translating strategy into operations
Integrated business and activity
planning
1
1
2
32

12. 12
Efficient Cost Management
Depletion of
surplus.
Blocked Material
code of surplus
Issue surplus w/o
approval on first
come first basis.
Physical
verification &
Vendor
reconciliation
Consolidation of
Services & Materials
Company-wise Annual
Rate Contract
Standardize Scope of
Work
Inventory Optimization

13. 13
Planning for Financial Consequences
Safety &
environment
leadership
Long-term
vision &
market
analysis
Technologi
cal
innovation
Significant
experience
in O&M,
Use templates for
consistency and
comprehensive
coverage
Define Work Category
Define plan of
execution to meet
business objectives
Financial
Success
Work
Execution
Prioritization
Identify the
preparation
requirements for each
review
Work
Closure
Feed back
&
Documentat
ion
Conduct focused
meetings based
lesson learnt
2
3
4
5
6
1
Metrics
Planning
Proforma
Limitations
Has the company
prepared annual
financial plans for two
or more prior years?

14. 14
Fighting time and resource
Consistency
Complexity
Collaboration
Common system &
standard work processes
Integrity
Ingenuity
Reliability
Benchmarking

15. 15
Re-establishing the importance of powerful prediction
and inspection tools
Plant Measurements & Historian Information
Control Systems
PAM
EAM / CMMS
Maintenance Operations
* EAM: Enterprise Asset Management
CMMS: Computerized Maintenance
Management system
AM Information Flow
AM Systems
EAM
CMMS
Real-Time
AM
Systems
Real Time Future ReadyBig Data
Intelligent
Analytical Engine

16. 16
Questions??