Technology Partnerships

Tatiana Mitrova

Director, Energy Centre, SKOLKOVO Moscow School of Management

October 15, 2019

By 2030, oil producing facilities for 125 MTPY, requiring new

technologies, should be launched to maintain Russian output at

550 MT

Oil output in the existing fields is to decline by an average of 3% in 2018/2030

By 2025, the output is to be maintained due to the new fields to be developed

After 2025, the current facilities will be insufficient to maintain the output at 550 MT

Source: Energy Centre, SKOLKOVO Moscow School of Management

34 35 35 36 36 37 37 38 38 39 39

465 459 454 447 413 398 380 361 338 318 300

54 69 79 88

98 98

95 93

91 89

87

0

100

200

300

400

500

600

2018 2019 2020 2021 2024 2025 2026 2027 2028 2029 2030

MT

Oil and Gas Condensate Output

Запланированные новые месторождения Действующие месторождения

Конденсат Целевой показатель

2

Planned new fields

Condensate

Existing fields

Target

What is meant by TP?

Technology Partnerships (TP) are a form of cooperation that implies exchange of knowledge, sharing of risks, resources to address process and business objectives that are reasonable to be resolved jointly

Global oil company

Domestic oil company

Oil related services

State

Equipment manufacturer

Institute

Technology developer

Technology Partnerships are always ‘non-zero sum game transactions’ 3

Technology partnership types: to create a new technology to transfer a technology (technology transfer)

Technology Partnerships: Main Objective is to Share Risks

• Pricing

• Global competition

• Geopolitical Global factors

• Depletion of the existing fields

• Tight oil share growth

• Environment

Technology factors

• High capital intensity of the sector Financial factors

• Local law

• State authorities’ joining JVs or partnership agreements

Governmental support

Formal risks

• Inadequate design of contracts

Informal risks

• Cultural differences

• Integration error

4

!

None of the global oil and gas majors is the leader in all technology areas simultaneously

01234567

Глубоководное бурение

ГРР

Нетрадиционные УВ

Природный газ как моторное …

Битоплива

EOR

Электромобили Водродомобили

Ветровая генерация

Солнечная генерация

СПГ

Бурение

Цифровизация

Map of Process Competencies: Seven Global Oil and Gas Majors

5

Deepwater drilling

Digitalization

Drilling

Biofuels

E-mobiles

Natural gas as motor oil

Prospecting surveys

Unconventional hydrocarbons

LNG

Solar generation

Wind generation

H-mobiles

Areas where companies have to act jointly

Development in extreme conditions and tight oil development

Oil recovery enhancement methods

Integrated pipeline systems

Socio-economic cooperation Environmental impact mitigation

Refining

6

Different technology partnership types apply, depending on the technology development stage

Sources: Energy Centre, SKOLKOVO Moscow School of Management, Taylor M., Taylor A., 2012, The technology life cycle: Conceptualization and managerial

implications, Int. J. Production Economics 140, pp. 541-553

Technology Lifecycle

7

Efficiency maximization

Cost minimization

Prove the idea

Co

st c

utt

ing

Time Establishment Rapid growth Maturity

TP for new technology creation

TP for technology transfer

Prototyping

Partnership Types

Legal forms:

License agreement

Technology cooperation agreement

Joint venture

Joint industrial project

Commercial agreement with technical support

Production agreement

Educational

Regulatory

Financial

Technological

Partnership can address one objective or cover several areas

8

Working together is more advantageous than individual work

Competitive advantages

Profit allocation

Risk allocation

Rapid market entry

Access to new markets

Technology Partnership Advantages

9

Technology Partnerships for Technology Transfer

Technology Transfer

Technology transfer occurs from the

transferor (often a global oil company) to the

recipient (often a domestic oil company),

with subsequent commercialization

ТТ includes transfer of physical assets,

documents, information or knowledge

TT is complete when the recipient is able to

use it on its own

Intra-sector TT and creation of new ones

Direct technology transfer

TT for market entry

Inter-industry TT

>

>

>

>

11

TT Factors

Recipient’s scientific background

Governmental support

Cultural distance

Geological and climatic conditions

Competitive and business environment

12

Intra-sector ТТ: New Technology Creation

New oil production

technologies

Yield increase

Reduction in capital expenses

Shell Deepwater field development technologies

Petrobras Pre-salt field development technologies

Petrobras and Shell

15

Direct Technology Transfer: Iran Case

NISOC Statoil Irani engineering

companies

• Collector research technology

• Integrator: National Iranian South Oil

Company.

• Contract term: 3 years (2001/2003)

• Fields: Ahvaz, Maroun, and Bibi Hakimeh

• SW for database maintenance and analysis

purchased and installed

Professional level of project top

managers improved

Databases for three fields prepared

Data transfer protocols efficiency

enhanced

Technology relevance: at best, it is a

technology of today, at worst, that of

yesterday, and it may become obsolete

rather quickly

14 17

ТТ for Market Entry: Local Content

Sonatrach

9 foreign oilfield service companies

Technologies localization

15 years of operation under preferential

conditions

14

Inter-sector ТТ: Global Expansion

BP’s and Namco’s BrightWater Project

1997

• ВР begins operations

1998

• BP • Mobil • Texaco • Chevron

1999-2000th

• BP • Nalco • Chevron • Mobil • Texaco

Applied by BP in the following projects: MilnePoint, PrudhoeBay, Samotlor, Tangri 16

Technology Transfer:

TT gives the advantage of a comparatively quick technology acquisition and lower costs, as compared with the technology development One has to account for the consequences of speed and cost savings - quick obsolescence of technologies

Organized correctly, TT may lead to

creation of a new technology

ТТ in Russia: institutional obstacles No risk insurance for innovative companies No support to startups and small companies at the

technology introduction stage Underdeveloped financial tools for promotion of

innovations

Technology monitoring can be one of the areas of TT efficiency increase.

17

Technology Partnerships to Create New Technologies

Public-private TP: Addressing Strategic Objectives (1)

USD 375 million 10-year development financing program (since 2005) Extra-deep fields

Unconventional resources

Small manufacturers Independent financing of 20% to 50% of the project cost

DOE

(NETL)

RPSEA

Partner companies

Research Partnership to Secure Energy for America

Financing distribution among partner companies

19

Public-private TP: Addressing Strategic Objectives (2)

DEMO 2000 Program (Norway)

Financing 12%-27%

МPE

Subcontracts for tests, laboratory work

Norwegian investment center Financing 10%-

37%

Equipment manufacturers

Financing 38%-77%

Global / domestic oil companies

Reduction in hothouse gas emissions and

power savings

Digitalization

Arctic regions

priority areas 4 Environment and energy savings

Prospecting and enhanced oil recovery

Drilling, pumping, and wellwork

Production, refining, and transportation

main topics 3

20

TP with Equipment Manufacturer: Upgrading

Pemex, Mexican Oil Institute (IMP), GE Oil&Gas

GE O&G

Equipment

IMP

Well equipment onshore and offshore

Underwater equipment monitoring

Pemex

Financing Equipment upgrading

21

Intra-Sector TP: Field IoT

GE Oil&Gas and ВР

For 6 months of 2016, BP ‘saved’ 118 mln. b.o.e.

BP

Equipment for offshore operations, for probe installation

GE Oil&Gas

Installation of probes, data collection and analysis

Remote monitoring

SW works out potential problems

SW license

22

Inter-sector TP: Efficiency Increase

Shell and HP

Shell

Financing

HP

Development of seismic data processing technology

Seismic data processing quality

Low noise level

Power savings

Patent

23

Inter-sector TP: Advancing Robots

Autonomous underwater robotic vehicle (AURV) Aquanaut

Schlumberger

Transocean

Houston

Mechatronics

Reduction in underwater work costs No need in hiring or purchasing expensive ships

No need for humans under water

Sourc

e: H

ousto

n M

echatr

onic

s U

nveils

Revolu

tionary

Underw

ate

r R

obot H

OU

ST

ON

, A

pril 26, 2018 /P

RN

ew

sw

ire/

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Conclusions

Technology partnerships are a form of cooperation for technology creation or exchange

Maximum benefit from cooperation (benefits from sharing of investments and risks within a TP should exceed the risks of losing competitive advantages when implementing technology projects on one’s own)

TT is a simplified TP form, it may also lead to creation of a technology

The extent of transaction costs needed to

establish and maintain stable partnership is

essential

To address strategic objectives, the State often acts as one of the partners

The most significant technology cooperation deliverables can be seen in the areas where governmental support exists and where a favorable environment encouraging technology partnerships and technology development is created

Oilfield service companies are more open to partnerships and more willing to share the deliverables of new technological developments

Digitalization and IoT have became new areas for cooperation

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