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Managing Supply Chain during Covid-19 Pandemic
15 September 2020
Esteemed Forum Members,

We are all aware that we experiencing unprecedented times as a result of the Covid-19 pandemic and the impact this has on our economies. With governments lifting lockdowns and adopting a more risked based approach to managing Covid-19 hazard and thereby as a consequence allowing (or at least encouraging) the workforce returning to their place of work, I am wondering how this is managed by the oil & gas supply chain.
I am aware that Oil and Gas UK have published guidelines how to mitigate the risk of Covid-19 for the offshore UK workforce but as one would expect it does not address the commercial risks or impact.

Thus I am wondering how the supply chain, but in particular how Service Co and Drilling Co personnel, is managed by the various companies. The question I would like to receive a response on:
  1. Are suppliers invoicing their buyers or clients for crews / personnel in quarantine prior to travel offshore? (i.e. I am aware that some operators have personnel mobilised 48 hours before travelling offshore to undergo Covid-19 testing). And if so, is this at full rate or a special rate? Or zero rate?
  2. Are you aware of (and can you share) any additional contractual terms & conditions created and included in contracts as a result of the pandemic?
Appreciate any response on this post.

Many thanks in advance,
Harald Benning


5 answer(s)
ColinCGB
Operations Petrophysicist
Gaia Earth Sciences Ltd
Total Posts: 17
Join Date: 21/12/11
I am self employed consultant based in UK but working both in UK and other countries (when there is work). For one client, I recently spent 7 days in a hotel in quarantine before going offshore. It was supposed to be 14 days quarantine but the Operator gave a dispensation to 7 with a PCR swab test.
I remained in my hotel room for 7 days with food brought to the door by masked staff. I payed the bills and was reimbursed by the Operator via expenses after the trip.  I received my full day-rate from the day I left my home as usual per my standard contract terms.  I arranged the PCR test, and the operator also reimbursed me for that.
The same operator had their Wellsite geologists remaining in country from April and staying in a rented apartment rather than rotating back home, during their days off the rig.  They told me that they were on full their usual rate through-out.
BUT of course adding a minimum 7 day quarantine to their costs for people is leading to them re-considering whether they will mobilise all the same personnel roles to the wellsite for the next wells, and whether or not some of the support can be provided remotely.

I am also aware of a couple of Operators asking for people, and making clear that they intended to pay a zero day-rate while the people quarantine in a hotel.

Obviously the economics can be different for a large company such as a Drilling Contractor,  Baker, Schlumberger or Halliburton than for self-employed day-raters working via agencies or directly. I do not know how they are handling such scenarios.



PabloAU
Consultant
SPREAD Associates
Total Posts: 7
Join Date: 24/11/15
Harald, pretty similar to Regis, we currently have 2 projects running, so to summarise. as follows:
Mobilisation
  1. 3rd Party Service Partner (TPSP) invoices at reduced negotiated rate to test / position personnel to client uplift point
  2. Contract reference / well name and AFE code (Client) to be on ALL invoices prior to submission by TPSP
  3. Accommodation for the same is at TPSP cost
  4. Client provides agreed Per Diem (No Alcohol) to the TPSP
  5. From Client uplift point, client picks up full rate as per normal
  6. Crew change / De-mob is the reverse
  7. Logistics in country is responsible for the accuracy of the inbound / outbound head count accuracy
  8. Above TPSP invoices to the client collated and submitted weekly (Call out crew's etc)
  9. On site managed by Client rep or (assigned delegate)
As an aside, we were able to "ad-hoc charter" fixed wing aviation support into / out of country (30/30 rotation - travel additional), at a favourable cost to the client, thus removing the reliance of "scheduled" carrier's or  "budget carriers. All aviation assets were risk assessed by the client as well as legal & client government departments.

Thus far (3 months) it has worked well - hope this assists
Adam Miszewski
Global Ops Mgr
AnTech
Total Posts: 3
Join Date: 11/05/16
Harald, 

My experience with a Middle Eastern NOC is that they are unwilling to accept any additional cost due C19 mitigation measures. I think you will get a range of responses depending on the operator involved. I'm interested to see other experiences also.

Adam
Harald
Senior Wells Advisor
Redstone Drilling
Total Posts: 41
Join Date: 13/09/07
Regis,
Many thanks for your prompt and detailed response.

Are there any other forum members willing to share their experience on the topic?

Many thanks in advance,
Harald Benning.
Regis STUDER
Well Construction Lead
DrillScan
Total Posts: 25
Join Date: 27/02/16
Harald, 

To answer your point 1/ an example below of terms in place with a major independant O&G operator involved in Africa:

CORONA VIRUS (COVID-19) ADVISORY – APPLICABLE PERSONNEL CHARGE FOR THE QUARANTINE
PERIOD.
Kindly recall the communication issued by the Regulator announcing various measures to contain the spread of COVID-19. Refer also to our last Medical Advisory wherein COMPANY
introduced a mandatory Quarantine Period prior to any trip to offshore locations, so as to safeguard the health and safety of COMPANY Staff and Service Providers’ employees working in such locations.
As a responsible International Energy Company, COMPANY is funding various measures aimed at controlling the spread of COVID-19, including but not limited to providing accommodation, feeding and logistics support to Service Providers’ employees during their quarantine period. In addition, COMPANY is committed to ensure that Service Providers’ employees who are mobilized for duty during the COVID-19 pandemic, continue to receive net remuneration not less than their usual office rate, in accordance with their respective employment contracts.
In line with the above commitment, COMPANY has approved the payment of a discretionary personnel charge applicable to Service Providers’ personnel during their quarantine period. The  discretionary Day Rate for Quarantine Period shall apply as follows;
1. Personnel charge: For each day a Service Provider’s personnel is on quarantine, COMPANY shall accept
a personnel charge (Day Rate for Quarantine Period), equivalent to 50% of the operational day rate.
2. Accommodation and feeding: COMPANY shall endeavor to provide suitable accommodation and feeding to Service Providers’ personnel during the quarantine period. Nevertheless, COMPANY may on a discretionary basis, allow Service Providers to make arrangements for their own quarantine facilities, subject to overall supervision by COMPANY.
In situations where the quarantine facility is under the control of the Service Provider, COMPANY shall reimburse the cost of accommodation and feeding in line with COMPANY-approved benchmark.
In view of the above, Service Providers are henceforth required to attach to their invoices, details of the net remuneration paid to their employees during their quarantine period.

Régis
Posted by

Harald Benning

Senior Wells Advisor

Redstone Drilling

Total Posts: 41
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