Supply Chain

Realization of a large-scale project such as the development of the Salym group of oil fields assumes involvement of a large number of contractors: construction companies, design institutes, suppliers of equipment and materials, and transportation companies. This requires a well-defined and efficient contractor selection system. Potential contractors are supposed to have the necessary capability and experience, as well as qualified personnel and management ability to ensure that the work to be performed would be in accordance with SPD’s high quality and HSSE standards.

SPD awards contracts on a competitive basis with objective and equitable treatment of all contractors. The bids are reviewed independently by two groups of experts: one for technical aspects, the other for the commercial ones. The two groups rank the bids and the results are summarized and reviewed at the joint meeting of the tender board, which makes the final decision on contractor selection. Providing that all other conditions are equal, companies from the local region are given preference by SPD. Local suppliers from the Salym village and Nefteyugansk district now account for approximately 15% of the total SPD spend.

Since 2004, along with the conventional "paper" method of responding to a tender, SPD has been using online bidding. It is a method of collecting prices using an Internet auction tool and is designed to streamline negotiations into a one-time competitive bidding event. Online bidding has proven to encourage good procurement practices, increase transparency, and receive the most competitive prices. SPD has completed online biddings for various types of contracts ranging from provisions of well logging services, construction of a waste disposal polygon to the supply of stationery and provision of taxi services. In 2009, the online bidding software was updated to include the ability of SPD experts to evaluate technical, as well as commercial information over the Internet, which has considerably reduced the time required for such activity.

SPD promotes fair competition between the vendors and service providers in the Salym project. During its early stages, the company made a thorough analysis of the Russian construction and drilling contractors market. Based on this analysis, SPD contracts both large and well-established Russian manufacturers and smaller local contractors. More than 80% of SPD’s budget spend goes to procure services and materials from Russian companies. In those cases where Russian companies cannot meet all the requirements for a particular job, SPD hires international service companies or buys Western equipment. This approach allows the company to combine the best that can be offered by Russian and international manufacturers.

Participation in the Salym project gives Russian companies important experience which they need to become competitive in international markets. In 2007, Shell opened a special department whose purpose is to help Russian contractors and manufacturers participate in tenders held by the company in its international operations. As a result, several Russian companies, including those contracted by SPD, have received contracts with Shell operating companies in other countries, including those manufacturing drill bits, drilling rigs, casing and line pipes, wellhead equipment, and submersible pumps.