The Egyptian General Petroleum Corporation (EGPC) has concluded a two-day forum on transitioning to Performance-Based Contracting (PBC) models in well drilling, marking a significant departure from traditional time-and-materials procurement towards outcome-linked, results-driven agreements.
Held under the auspices of EGPC CEO Salah Abdel Kerim, the forum introduced a new awarding philosophy shifting from ‘lowest price’ to ‘best performance at the lowest total cost.’ The new system aims to implement turnkey contracts and integrated project management contracts in the drilling sector to reduce drilling time, accelerate well integration into the production map, and attract advanced technologies by tying contractor profitability to actual performance.
Leading global oilfield services companies presented their capabilities and readiness to assume performance risk. SLB highlighted its Efficiency By Design approach and fixed-price turnkey contracts. Baker Hughes drew on regional experience including drilling over 200 wells in Saudi Arabia and saving $21 million in the UAE through integrated solutions and supply chain optimisation. Halliburton presented its Risk & Reward model, where contractors earn incentives for exceeding planned performance benchmarks. Weatherford showcased its Target Cost model based on a Gain/Pain Share framework, drawing on experience delivering over 3,750 wells worldwide including major turnkey projects in Iraq, Oman and Saudi Arabia.
EGPC confirmed a flexible, gradual approach to rollout, with turnkey or integrated service models selected based on the specific nature and risk profile of each field. The corporation agreed to launch a pilot phase on selected wells to measure economic returns accurately before full-scale implementation. The shift forms part of Egypt’s five-year plan roadmap to double national production rates.
Source: egyptoil-gas.com