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Disrupting the Oil & Gas Industry June 2019

Framo & Cognite Explain How to Get Started with Performance-Based Contracts

Framo & Cognite Explain How to Get Started with Performance-Based Contracts

Digitalization has already begun to disrupt value chains across industries. For Original Equipment Manufacturers (OEMs), one of the consequences is a shift from the sale of equipment to the sale of machine-as-a-service. In Oil & Gas, the progressive players operating on the Norwegian Continental Shelf are setting the trend and developing resources to help the rest of the ecosystem make this transition a smooth, profitable one.

The 2018 performance-based contract between Aker BP--one of the largest independent oil companies in Europe--and Framo--a global leader in pumping systems--has already resulted in impressive maintenance cost savings. Moving away from traditional calendar-based maintenance toward a data-driven maintenance regime has opened opportunities for both parties. Together, Framo and Aker BP decided to present their “SMART contract” as a kind of template for the rest of the industry.

At the SPE Bergen One-Day Seminar in May 2019, Framo and Cognite took the stage in Bergen, Norway to present Prerequisites for Performance-Based Contracts: Digitalization and Data Sharing Changes Business Models in E&P Supply Chain. (Get the paper from the Society of Petroleum Engineers.)

The main thrust of the paper is that developing a performance-based contract requires imagination, collaboration, and a strong digital foundation on both sides. With the right digital competence and digital infrastructure in place, both Operator and OEM can make the most of the data they already have. The paper describes the way Aker BP and Framo utilize Cognite Data Fusion to share a selected set of live contextualized operational data with the following results:

  • 30% reduced maintenance
  • 40% increased pump availability


Among the prerequisites explained in the paper are strategies for alignment on a number of key factors, including:

  • the definition of success (common KPIs based on pump performance and increased environmental sustainability)
  • compensation structure
  • verification of the algorithms used to power the contract

We're excited to see this change reverberate across the industries we serve. Read more about the Aker BP/Framo vision in our free white paper The Future of the Field: Performance-Based Contracts Disrupt the Oil & Gas Value Chain.

If you have questions about performance-based contracts, Contact Us today!