Trobexis, Streamba and Stinnett & Associates recently shared our perspective on the importance of creating a brighter future for the energy and minerals sectors through superior collaboration across the people and materials supply chains. We’ve already seen a great deal of excitement from leaders throughout the energy and minerals industries who recognize today’s operating models aren’t sustainable. Instead, they’re looking for an effective approach to realize the financial efficiencies cited in our previous publication while aligning with the principles of greater engagement and collaboration, lower environmental impact, reduced safety exposure and advancement of local communities.
Together, we recognize that the success of this initiative hinges upon engagement through an established global governance structure that promotes compliance and excellence. Per Lopez-Claros, Dahl and Groff in Global Governance and the Emergence of Global Institutions for the 21st Century, “An essential purpose of global governance should be to create the enabling conditions for the achievement of these goals globally and the implementation of the principles on which they are based, together with governments and all the actors of civil society.”
To ensure the realization of value from an effective ecosystem for all participants, we believe a single global governing body accountable for alignment and engagement will:
- Provide global oversight and value validation
- Inspire participants to partner and learn from one another
- Ensure compliance with established standards and prevent ‘reinventing the wheel’
This approach will remove measurable friction which is absolutely required if the energy and minerals industries are to unlock potential and truly thrive. What we build together must be something we can sustain, scale and adopt—before we implement any changes to our operational model.
Setting Up for Success
To achieve a positive outcome, a single, global and respected governing body should be established by an organization such as the World Economic Forum (WEF) that can facilitate consensus. This establishing entity will:
- Charter the governing body
- Assemble membership from across the energy and minerals industries as well as host governments to scale across all ecosystem parties
- Set engagement protocols to frame how the governing body will function and facilitate governing body gatherings
Our perspective is that the WEF is well suited to serve as the establishing entity for three primary reasons:
- There is a mandate on their 2021 agenda at the request of IEC leadership
- The WEF has recognized global influence and political neutrality
- For a limited time, the WEF has a real inclination towards action that could deliver meaningful outcomes
This is reflected in a recent WEF publication, “The Oil and Gas community of the World Economic Forum is joining forces to explore initiatives aimed at fostering collaboration between oil and gas industry companies and its ecosystem.” [emphasis added]
In short, what is being said here is that by turning up, participating and taking action at pace, we can all work together collaboratively to drive transformation. What can now be achieved that wasn’t previously possible and how do we make it possible?
Defining Global Standards
Once established, the work of the governing body is just beginning. Among its many responsibilities, key to sustaining the industry’s new way of operating is agreeing global standards under which targeted ecosystem objectives and participants will operate. This is an essential element to the industry’s collective success by agreeing on transparent, measurable objectives to prevent contention among the involved parties.
When it comes to safety, security, health, environmental, technical and operational standards, there have been successful organizations established such as The Open Group and International Association of Oil & Gas Producers (IOGP), that we can lean on for momentum and pace. They were setup in the recognition that each IEC maintains a separate internal set of standards or a unique interpretation of the global standards. By recognizing that there is duplication within the IECs (requiring staff to maintain unique versions of the standards and to assess operations according to that unique version) we implicitly recognize that there is duplication for service providers within the ecosystem to adhere to each IEC’s unique standards in support of the IECs.
Instead, we propose that together we work alongside and select from existing standards of excellence from the multitude of standards variants that are used across IECs and adopt them globally and uniformly. While this is not a task that can be completed overnight, it is achievable due to the finite number of standards that must be set. The objective is to simplify to a single set of standards through consensus at pace and with those that are willing to embrace action.
The governing body will have direct input from each IEC to agree on health, safety and environmental (HSE) standards to ensure personnel are secure and reduce the carbon footprint of operations. It will also be able to establish standards for operating procedures and technologies, thus clearly setting accountabilities and expectations. Once the standards have been developed, the governing body will partner closely with host governments in each basin, globally, to craft regulatory language to mandate the model, ensuring any country-specific regulations are built into the new standards. In this way, we will have a positive impact on local communities and economies through increasing skills, building trades and encouraging entrepreneurship.
Selecting Lead Logistics Providers
With standards and regulations in place, the governing body will craft a scope of work and contractual terms for selecting a lead logistics provider (LLP) that will oversee and manage logistics collaboration for each basin. The governing body will then conduct sourcing events, in collaboration with host governments, to choose these partner LLPs. Contract ownership, administration and operational oversight will fall to the governing body.
Once the global model of standards and regulations is created and LLPs are selected for each basin, the global governing body will be accountable for providing program oversight. This oversight role will entail three elements:
- Updating, maintaining and ensuring compliance with the global standards
- Providing LLP performance assurance
- Sourcing and selecting any new LLPs
Setting safety, security, health, environmental, technical and operational standards is not a one-time task. Standards will continually evolve over time as the industry learns, new technologies become available and global expectations change. Empowered by data from the ecosystem, the governing body’s role is to ensure standards remain viable, simple and easily applied in the field.
The governing body will also audit basin-level LLPs, assessing their financial and operational performance, adherence to the terms of the global contract and enforcement of the global standards. It will be essential that the governing body provide active oversight to ensure service delivery, as nothing will more immediately undermine the LLP structure and this new model than performance failure.
Finally, the governing body could be responsible for sourcing the next LLP, or renewing the contract with the incumbent, at the end of each contract term, ensuring the LLP model remains a competitive scenario to provide the strongest incentives for performance.
Our industry needs the collective voice of the ecosystem to ensure what we build together will be successful, so please share your comments and thoughts to help strengthen this model. In particular, we’re curious about the one first step you recommend that this ecosystem take next.
Coming Soon: Insights on Proposed Operational & Digital Models
Stay tuned for the details of our proposed operational and digital models, which will simplify and streamline logistics management across energy and minerals while ensuring data integrity and preparing participants for our changing world and industries.
Trobexis provides a best-in-class global workforce planning solution designed to deliver on the industry’s long-awaited promise of a truly end-to-end process for the people supply chain.
Streamba connects, automates and orchestrates global energy supply chains, providing real-time visibility, collaborative cross-functional planning and applied machine learning to enable VOR, a best-in-class global logistics platform to deliver measurable operational discipline safely and at scale, rapidly.
Stinnett & Associates is a professional advisory firm that strives to maximize value for public and private companies, boasting significant experience serving the energy and minerals sectors.
Stinnett & Associates is not a CPA firm.