Qatar Petroleum Experience in Implementing the Measurement Strategies for Custody Transfer, Allocation and Royalties

From the reservoir to the final consumer sales point, the flow and quality related to energy is estimated, quantified, or in an ideal situation is measured with very low uncertainty. Organization of Petroleum Exporting Countries (OPEC) reference basket averaged $107.52/b in August, and the world oil demand growth was revised in 2013 by 25 tb/d (1), in the longer term, prices may reach $155/b by 2035 (2), additionally, energy consumption has been estimated to increase 54% from 2010 to 2035, fossil fuel will account with 82% (2). Considering these short and long term estimations, the proper management of the uncertainty levels related to measurement systems in the energy sector has an intrinsic financial risk exposure that has to be addressed, and in most of the cases, a clear framework has to be established and led by the reserves owners. Technology has been evolving to manage better levels of uncertainty, but it is an endless journey trying to find the “true value” in order to safeguard the net profits of the shareholders. In the case of National Oil Companies (NOC), this challenge is translated in major strategic paths that are fully linked to the long term vision of an entire nation, and if we consider the nations where the Gross Domestic Product (GDP) is propelled by the Oil and Gas sector, the discrepancies related to product measurement may create a tremendous impact in the domestic economy. In consequence, around the supply chain, where different parties are directly involved in energy custody transfer process, the transparency and clear measurement terms are required for the buying and sales transactions. In many of those cases, royalties payment is involved, this issue must be fully monitored and controlled by the NOCs, but clear terms has to be agreed with the International Oil Companies (IOCs) in order avoid financial losses due to sub-optimal measurement practices. Qatar Petroleum (QP) has embarked in an ambitious task to implement a “Measurement Strategy”, to be applied to all the Joint Ventures and Production Sharing Agreements Operators that are located in the State of Qatar (SoQ). One of the key elements in the Measurement Strategy is the creation of a common framework to operate the measurement systems in the SoQ. The complexity lies to boost this initiative in an environment where different players have already an intrinsic risk related to their own operations in terms of hydrocarbon imbalances due to measurement uncertainties, and every single operator could operates the measurement system with a different asset management strategy. This paper will present the case and the lessons learned from this implementation process in order to deploy an unique framework to manage the measurement systems, where, the approach utilized to manage the diversity from the managerial perspective was based in the Kotter method.