Lukoil #346 (October-November 2019)

Today digital transformation is a key theme in the international oil and gas sector. The process began in the 2000s when business leaders realized that IT solutions could drastically improve business efficiency. The 2014–16 drop in oil prices helped speed up companies’ transition to a digital business model that would allow them to simultaneously minimize losses and improve productivity. LUKOIL 4.0: KEY TRENDS IN DIGITAL TRANSFORMATION I t’s important to keep in mind that digital transformation is not just about implementing new technologies in production. It’s a transition to a new, integrated business model that utilizes all of the business’ units into efficiently realizing the company’s strategic goals. LUKOIL’s Strategy 4.0 foresees the realization of seven programs: Digital Duplicates, Digital Personnel, Robotization, Digital Ecosystem, Digital Platforms, Corporate Culture and Cyber Security. The company is currently realizing pilot projects within each of these programs. Alexander Novak, Russian Energy Minister: “Digitization is currently the primary talking point for Russia’s energy industry. It’s impossible to see the sector’s future without digital technology”. 20 549 3 237 3 620 1980 1900 1950 2030 2000 2018 Technological equipment’s e ī ect on e ĸĐŝ ency IT’s e ī ect on e ĸĐŝ ency Annual global oil produc Ɵ on (millions of tons) INFORMATION’S GROWING INFLUENCE ON BUSINESS EFFICIENCY 4 221 A company’s e ĸ ciency is directly dependent on digital technologies Forma Ɵ on of the oil sector and mechaniza Ɵ on Automa Ɵ on Computeriza Ɵ on Complete Digi Ɵ za Ɵ on Early Digi Ɵ za Ɵ on Di g it a l Dupl i c at e s : c r e a t i ng mathematical or computer models of production and business processes. Modeling objects’ behavior to optimize business decisions. Digital Personnel: equipping personnel with modern digital devices. Improving productivity with the help of the latest technological solutions. Robotization: digitizing labor. Physical labor – with the help of robots and drones; intellectual labor – through artificial intelligence and cognitive technologies. Digital Ecosystem: integrating the company’s information technology software system with those of its partners. Increasing speed and lowering the cost of transactions while simultaneouslyminimizing risks. Corporate Culture: preparing personnel for the company’s digital transformationwith the help of newproject management methods and changes to its organizational structure. Digital Platform: creating a single set of tools for managing large sets of data. Cyber Security: creating a single Security Operation Center. LUKOIL expects a 2–3% increase in oil reservoirs’ production, a 15–20% decrease in theirmaintenance costs and a 5–10%decrease in personnel costs as a result of the efficiencies brought about by these corporate digital programs. 6 Digitalization