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Advertisement of the Tender
DATEDT: 02-OCTOBER-2017
RFP-2022962 - UPCOMING TENDER
CONSULTANCY SERVICES FOR DEVELOPING TARIFF SYSTEM FOR DOWNSTREAM PIPELINE NETWORK
BRIEF SCOPE OF SERVICES
1.0 THE NEED
Kuwait Oil Company (K.S.C) is a wholly owned subsidiary of Kuwait Petroleum Corporation (KPC), which is fully owned by the State of Kuwait. It has diverse business interests across a wide spectrum encompassing all aspects of the hydrocarbon industry, from onshore and offshore upstream exploration through production and refining, marketing, retailing, petrochemical, crude oil & gas transmission services and marine transportation of crude oil and gas products. Kuwait Oil Company (K.S.C.) is the upstream arm of KPC and is engaged primarily in onshore upstream exploration and production of crude oil and gas. In addition to upstream activities, The Company is also engaged in marine transportation of crude oil & gas products for export and transportation of various types of fuel and gas to the Ministry of Electricity and Water, KOC and many private customers in the industrial areas of the State of Kuwait.
The downstream business infrastructures (MEW infrastructure, Mina Abdullah consumers’ infrastructure and Shuaiba Industrial Area consumers’ infrastructure) were transferred to KOC in 2004 and thereafter, the Company has been servicing these infrastructures (operations/spare parts/maintenance/inspection, etc.) without any back-charge for these services.
The downstream business being new to the Company, no tariff services system exists in the Company, and neither KPC has any mechanism of back-charging customers for these services as per the supply agreements with the customers.
Therefore, there is a need to develop a tariff system which would set a standard to convince KOC downstream customers and the auditors that this system is practicable as per international standards/practice.
2.0 COMPANY’S DOWNSTREAM OPERATIONS
Company’s downstream operations currently manage a pipeline network of more than 7000 Kms across the State of Kuwait, carrying various kinds of gasoline products such as Crude Oil, Heavy Fuel Oil (HFO), Fuel Gas (HP-LP), Lean, Gas, Rich Gas, Gas Oil, Low Sulfur Fuel Oil (LSFO) and Multi-phase KGOC pipeline (Gas/Condensate). The extensive pipeline network is situated both within and outside of KOC’s upstream operational boundaries.
The pipeline network is a complex one and comprises of Point-to-Point inside the Company boundaries, Point-to-Point outside the Company boundaries and multiple user-shared network. The operations and maintenance of this complex network is managed by a dedicated Team which also sources additional services from other Teams within the Company. The pipeline network is hooked up to SCADA system for monitoring of the operations.However, the network inventory/hierarchy is not properly reflected in the Company’s operational and financial records and the operational activities and financial transactions pertaining to this complex network may become mingled with other activities of the Company at this point in time and may not be distinctly separable in both operational and financial records. Therefore, baseline of current activities and cost of operations have to be set.
3.0 THE OBJECTIVE
Owing to the nature of the complexities of the operations and the need to have a robust mechanism to charge the customers an appropriate tariff for transmission services, KOC is desirous of engaging the services of a professional consulting firm to conduct a study and develop a Tariff system along with implementation roadmap. The objective of the study will be limited from the receipt point up to the delivery point. It will cover fuel gas and liquid fuels within the Company jurisdiction. The study deliverables will be as follow:
- Project initiation and baseline assessment including Gap Analysis, identifying key stakeholders and benchmarking the Company’s operations considering the following:
- To review the current pipeline network hierarchy and operations across the State of Kuwait and how the network is demarcated amongst different product lines and technical specifications of the pipelines and different customers either on a dedicated or shared network.
- To review how the operations of the network are carried out and how the costs are being captured.
- To review the maintenance intervals plans and how the maintenance activities are carried out.
- To review the current service quality standards, if any and mechanism to measure the quality standards.
- To review the IT and Finance infrastructure and their capabilities to meet a pricing structure including but not limited to:
- Company’s Chart of Accounts and Oracle system
- Company’s Fixed Assets Register
- Company’s financial records with specific reference to network operations
- Company’s Cost Allocation Models
- Company’s Materials and Management System (Maximo Software)
2. To analyze what should be priced and what costs should be considered.
3.To determine how the costs for the proposed tariff be allocated.
4.To design a tariff structure with various options considering international best practices and to be fair in alignment with the local regulations.
5.To imbed the capability for the proposed tariff system to capture expansions and upgrades to the network (i.e. new pipeline, new facilities etc.) in addition to new customer(s).
6.To evaluate the viability of retroactive charging the customers for services dating back to 10 years.
4.0 Scope of the Services shall be executed in eight (8) stages, as specified below.
Stage-1 : Review information related to Stakeholders
Stage-2 : Assess Company’s Baseline Practices
Stage-3 : Benchmark the Network Tariff Strategies
Stage-4 : Conduct a detailed Analysis of the Pipeline Network
Stage-5 : Assess the Different Options and Recommend
Stage-6 : Development of Roadmap for Implementation of the Project
Stage-7 : Undertake Tailored Change Management Activities
Stage-8 : Define Infrastructure and IT Requirements
