Inventory Management at Westa Petroleum Services: HBP# HK1351

For the exclusive use of J.
Singh,
2023.
HBP# HK1351
SAADIA IRFAN
NIDA KARIM
FIZZA KHAN
INVENTORY MANAGEMENT AT
WESTA PETROLEUM SERVICES
With hundreds of thousands of inventory items at Westa Petroleum Services (WPS), each
having its own characteristics, inventory management seemed to be an impossible game.
Ahmed joined WPS as Procurement Manager after working as a data analyst at TeraData,
spending two years in consulting specializing in optimization, and obtaining his degree in
mathematics at a leading university in Pakistan. Although his job description included many
tasks such as initiating procurement partnerships and devising cost-effective deals, Ahmed’s
priority was to urgently work out a more effective way to manage the inventory.
WPS’s Chief Operating Officer (COO) was concerned that the excess levels of inventory would
lead to a requirement for more warehouse space, increased holding costs, bigger financial losses
due to frequent write-offs from thefts and damages, and capital tied up unnecessarily. Inventory
levels that were too low, however, carried the risk of stock would run out and therefore
disrupt the whole supply chain; it might have severe consequences financially and for WPS
clients. After a month in his new position, Ahmed sat in his office compiling notes for a
scheduled meeting with his new team and the COO where he was to recommend
improvements to the inventory management.
The Oil and Gas Industry

The oil and gas industry contributed 18.34% of the total gross domestic product (GDP) in
Pakistan. The industry consisted of three main segments: upstream, midstream, and
downstream. While the downstream and midstream segments focused on refining and
transporting oil, respectively, the upstream segment was the provider of the oil and gas services
to the downstream companies. In particular, the oil and gas upstream segment provided
products to the oil and gas refineries by searching for reservoirs of oil and gas in the country
and then drilling to extract them. As of 2019, Schlumberger, Halliburton, and Baker Hughes
were the three largest oil and gas service providers in Pakistan in terms of total sales
revenue.
Dr. Saadia Irfan, Nida Karim and Fizza Khan from the National University of Sciences and Technology prepared this case for
class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. The authors
might have disguised certain information to protect confidentiality. Cases are written in the past tense, this is not meant to imply
that all practices, organizations, people, places or fact mentioned in the case no longer occur, exist or apply.
© 2022 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be digitized,
photocopied or otherwise reproduced, posted or transmitted in any form or by any means without the permission of The
University of Hong Kong.
Ref. 22/733C
Last edited: 23 June 2022
This document is authorized for use only by Jatinder Singh in OPMT 620-52 taught by Angel Valerio, University Canada West from Sep 2023 to Mar 2024.
For the exclusive use of J. Singh,
22/733 2023.
An oil well could produce 100 to 5,000 barrels of oil per day. In general, the higher the
production of the oil, the higher the profit of the drilling company. The oil wells in northern
Pakistan were 5,000 to 6,000 meters deep, while those in southern Pakistan were relatively
shallow, with a depth of 2,000 to 4,000 meters. The concentration of wells was greater in the
southern part of the country.
The overall economy in Pakistan depended largely on oil and gas as the major source of
energy generation. As it became increasingly costly to extract oil from deep wells and the
amount of gas production couldn’t meet the demand arising from the economic development, the
Pakistani government started importing liquefied natural gas (LNG) from Qatar as a substitute
for natural gas in 2018. In 2019 the supplies of imported LNG increased by 14% over the
year before. In addition to LNG, the manufacturing sector used coal as a power-generating
source to decrease dependence on oil and gas. The government also began to focus on
renewable sources of energy such as wind and solar energy. All these measures led to the drop in
demand for oil and gas and, hence, the business of the oil and gas companies. Since the revenues
of service companies were tightly tied to the activity level in the downstream oil and gas
industry, inevitably oil and gas services companies were negatively impacted.
The Company
WPS belonged to the upstream oil and gas industry in Pakistan, specializing in providing oil
and gas well-drilling services to oil producers in the country. Based in Islamabad, it was a
local company founded in 1995 and was one of the 10 largest drilling companies in the country.
Most of its competitors were international (with Schlumberger, Halliburton, and Baker Hughes as
the top three). WPS served three clients, namely Pakistan Oilfields Limited (POL), Shell,
and Oil & Gas Development Company Limited (OGDCL), in the cities of Chakwaal, Kohat,
and Rawalpindi, respectively. These clients had negotiated day rates of USD31,000,
USD30,000, and USD28,000,1 respectively and had two years remaining on their contracts.
With all three drilling rigs engaged at high day rates, the nonproductive time (NPT) never
exceeded the ceiling of 1%, and competent manpower employed and profitability had
increased; WPS had every reason to be satisfied.
WPS hired 100% local employees and ensured the best quality service to its client. To WPS,
the benefits of hiring local people were twofold. Unlike in most of the Gulf countries, the
drilling operators in Pakistan were not required to localize job roles to comply with the
country’s local content legislation. As a result, the workforce of the international drillers mostly
comprised expatriates. The support functions of the international companies were centrally
based outside Pakistan and served the whole region. For example, the auditors, maintenance
team, and certification inspectors all were expatriates who came from abroad to the Pakistani
rigs. This meant that branches of these companies (such as Schlumberger, Halliburton, and
Baker Hughes) depended on staff from an international support function and faced increased
expatriate failure rates, which occurred when expatriate employees were not adequately able
to adapt to the local countries’ environment and challenges. One important challenge the
expatriates faced was that they were unable to move freely. The western ministries did not allow
expatriates to go to certain parts of the country because of security threats. Often their
security clearance took more than three months. Moreover, bullet-proof cars and escorts had
to be arranged for expatriates to go to concessions. At WPS, this issue didn’t exist as the
whole workforce was local and hence was able to freely move to the concessions in any part
of the country, if the need arose. For this reason, WPS enjoyed a high reputation among its
clients for its drilling services, with its client evaluation ratings never going below 95%.
Moreover, hiring local labor translated into lower costs and higher profitability for WPS.
1
All currency amounts throughout the case are in US dollars.
22/733 2023.
The contracts with each client required that in case of a necessary shutdown of a rig for
repair or maintenance or for any reason for which the client was not responsible, WPS’s
remuneration during such shutdown was calculated as follows:
A full rate was to be paid for the first 15 consecutive NPT hours
accumulated in any calendar month. After those 15 cumulative hours of NPT in
any calendar month, a zero-day rate was to be applied if the shutdown
continued. A zero- day rate was also applicable if drilling operations were
halted due to reasons within WPS’s control.
The NPT Issues

WPS started to face various challenges, and the COO found himself struggling with issues
on multiple fronts in 2018. The company’s NPT had shockingly increased from 1% to
approximately 8% in total operating days calculated on a monthly basis for the three rigs.
The increased NPT hit the company hard, as the company lost the day rate amounting to
over USD2.25mn for the three rigs in 2018 [see Exhibit 1].
The increase in NPT also had serious financial consequences for clients, as each client
concurrently had other contractors on the site engaged in logging, cementing, and wireline
logging processes. With operations halted because of delays on the part of WPS, the contractors
were left idle. As a result, the clients faced spread costs of approximately three times the
NPT loss. In such a situation, the operational evaluation the clients conducted dipped from a
core of 95/100 to 70/100, and this seemed to be a trend that had started in early 2018 [see
Exhibit 2 for a sample evaluation form]. In addition to filling in evaluation sheets, the clients
started to openly and frequently express their dissatisfaction in the head office meetings held in
Islamabad.
The shortfalls in performance, job quality, service reliability, and professionalism all led to
disappointed clients. It made running the business very difficult for the COO. Given this
situation, the COO’s key concern was that WPS no longer had a competitive advantage and
its reputation was continuously declining in the industry. The COO conducted rounds of
meetings with the team to identify what had caused WPS’s performance to deteriorate.
According to the team, the most apparent reason for the decline in reputation was the
decrease both in oil prices and in demand for oil extraction services worldwide, so the clients
had higher expectations. The team said that WPS should rethink its marketing strategy or
clients would leave WPS and start doing business with its competitors. However, the COO
knew that less apparent reasons were yet to be investigated.
The Inventory Management at WPS

WPS was a highly capital-intensive company, with its inventory broadly consisting of
drilling, mechanical, and electrical consumable parts for running the equipment [see Exhibit 3
(an Excel sheet) for a detailed list of inventory items]. The drilling parts comprised top drives,
hoisting equipment, solid control equipment, and pipe handling tools. The mechanical parts
included filters, valves, engine parts, reciprocating pump parts, compressors, and centrifugal
pump parts. The electrical parts included cables, receptacles, circuit breakers, motors, carbon
brushes, and transformers. In addition, for convenience, the warehouses at each rig stored
health and safety equipment (HSE), which included firefighting equipment, spill control
equipment, fall arresters, safety devices, and hazardous gas sensors.
Managing inventory at WPS was always a challenge because of the complexity and long
lead times to transport the inventory items from offshore. However, with increased profitability
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and
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sound business performance in the past, WPS had every reason to delay the reengineering of
the inventory process. WPS procured inventory only from financially stable, technically
qualified, and reliable sources from abroad. In evaluating potential suppliers, the company
considered delivery prices, supplier reliability, operational costs, and after-sales support. The
import of inventory was regulated by Statutory Regulatory Order (SRO) 678. 2 The available
options for importing inventory from abroad were by air and sea. WPS chose to import its
inventory by sea using the DHL courier service. DHL charged WPS according to the weight
of the consignment. There was a concessionary import duty of 5% for the industry. If any
item was imported temporarily (for example, any equipment or tool imported by a service
company from another country for a specific job was to returned to that country), custom
authorities could clear it against a corporate or bank guarantee without levying any import
duty.
WPS worked on a decentralized model with warehouses at each of the three rigs. When a certain
inventory item at one rig was needed, WPS ordered it directly from overseas, not from other
rigs.
Each warehouse in the rig employed warehouse men who made an inventory request to the
head office by making a service material order (SMO) with the approval of the tool pusher3
at the rig [see Exhibit 4 for a sample SMO]. The rig superintendent in the head office then
approved this request. A final approval by the COO was required if the value of the
requested
inventory was greater than USD5,000. Once approved, the SMO was forwarded to the supply
chain coordinator in the head office who prepared the purchase order (PO), which in turn
was approved by the supply chain manager and finally the COO [see Exhibit 5 for a sample
PO].
After the COO’s final approval, the supply chain coordinator took the quotation from the
original equipment manufacturer (OEM). The PO was sent to the manufacturer. The
inventory was ordered from three main destinations, namely, Houston in the United States,
Dubai in the United Arab Emirates, and Dhahran in Saudi Arabia. The lead time for inventory
ordered varied from country to country, depending on the distance involved. Typically, the
lead time was 70 days for Houston, 50 days for Dubai, and 60 days for Dhahran The goods
were directly delivered to the relevant rig, where the warehouse man put them on the shelf
and updated the records in the system [see Exhibit 6 for the process described].
As with all other roles, WPS employed two warehouse men to share the job at each rig; they
had a 14-days-on–14-days-off rotation. Zayyan and Ghazanfar were the warehouse men at
Rig No. 2. They had worked at WPS for over 10 years; both were highly experienced.
Having been acquainted for a long time, they had a good and harmonious working relationship.
Their mutual understanding was that they took work-related calls from each other, even on
their days off, and shared every detail during the handover process. Unfortunately, at the
beginning of 2018, Ghazanfar suddenly had to leave his job for family reasons. He was replaced
with a new recruit, Ali, who had been interning at the rig for the past six months.
One of the problems that the COO found was that WPS had accumulated a large amount of
inventory for some items, which was stored at the three different locations in the country.
The obvious intent was to house “sufficient inventory” that minimized downtime to avoid
any NPT cost to WPS and ensure its client satisfaction. However, the definition of sufficient
inventory remained unclear to WPS’s warehouse men. Historically WPS had set arbitrary
targets for inventory levels. Even so, the targets were frequently violated. No minimum and
maximum amounts of inventory level were set. At the rig warehouses, it was common to
find surpluses of some inventory items and shortages of others.
22/733 2023.
2
Statutory regulatory orders governing import of inventory in Pakistan.
3
The person who is the main in charge of the rig.
22/733 2023.
The Analysis
WPS needed to investigate the causes of the surpluses and low inventories. A thorough look
into the items revealed that the inventory could be bifurcated into one-off inventory and
recurrent inventory categories. The one-off inventory items ranged from repair kits to
overhaul engines. The recurrent inventory, on the other hand, included items such as filters
and liner piston valves of reciprocating pumps.
Ahmed conducted detailed interviews with the workforce at the rigs and noted the reasons
for each incidence of NPT [see Exhibit 7 for a year-to-date summary]. Ahmed concluded
the increase in NPT incidents could have been avoided with better inventory management.
While it was not possible to conduct a thorough inventory analysis on each inventory item,
Ahmed focused on obtaining the amount of each inventory item consumed in the past two
years. For this, he scanned the sea of past data files created by the team at the cloud in detail
for a week and came up with the information [see Exhibit 3 for the list]. The inventory
demand pattern had been fairly consistent over the past two years. Therefore, Ahmed deemed
it safe to base his analysis on the assumption that demand for inventory would follow the
same distribution pattern in the future. He decided to create a model to calculate the
minimum and maximum levels for each inventory item.
In addition, he physically visited each warehouse to tally the inventory balances, interview
relevant staff, and gather data to find out where attention was required. He was unable to
meet the warehouse men at all three rigs; however he managed to hold in-depth meetings
with both warehouse men at Rig No 2. He saw Zayyan on the last day of his shift and learned that
Zayyan had all the demand patterns and price fluctuations at his fingertips. Ahmed’s
contentment soon turned to curiosity about the actual reason behind the surplus and or
insufficient inventory levels. The next day, still troubled by the same question, he met with Ali,
who had just returned to start his next shift. Ali was a bright young individual who seemed
thrilled and enthusiastic about his new role. He had so much to share about his new
appointment that the meeting extended over lunch at the rig café. Ali shared how Zayyan and
Ghazanfar used to spend their overlapping day sitting at the same table discussing every
detail of the operations. He himself had joined them a couple of times as their intern.
However, he had laughed at how he couldn’t understand the majority of the discussion
because they had their own jargon. Ahmed deduced that Ali’s lack of experience, partly due to
the improper work handover from Ghazanfar, and the tendency to order more inventory than
needed might be some reasons for inefficient inventory management.
Ahmed observed a practice of conducting daily 9 a.m. meetings between the warehouse man
and the tool pusher to get things in motion, in addition to the ad hoc meetings that were initiated
by contingent events. However, he never saw anyone taking minutes at any of those
meetings.
Ahmed also noted that the warehouse at each location stored inventory without any segregation
of bins. The warehouses were not locked. As a result, the manpower at the rig frequently
took inventory parts from the warehouse without the knowledge of a warehouse man. In some
cases, critical parts were under the custody of technicians who did not work in the
warehouse. In addition, used or issued parts were re-stored in the warehouse. Could these
reasons lead to the inventory figures not tallying? Were there any other reasons?
The Challenge
Ahmed jotted down the various issues. He could see that definitely there were inefficiencies.
The challenge was not only how to solve the problems that had emerged, but also what the
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root
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causes were of all these inventory problems. An obvious solution to this issue might be the
digitization of inventory management, which would improve intracompany communications,
make the information consistent and transparent to the relevant personnel, and eliminate
paperwork and, hence, human errors. However, Ahmed knew that the companies in this
industry, no matter how big and profitable, still relied on Excel spreadsheets and didn’t have
much digitization in their drilling operations, while they did have fancy HR and finance
software in place. Ahmed understood that digitization required a significant IT investment,
including investment in IT software, IT implementation, future maintenance, as well as
human capital involved in the whole process. All this was something the company could not
afford at this time of turmoil. The challenge for Ahmed, therefore, was to find an optimal
level for inventory replenishment for each inventory item, given the existing resources. The
other solutions were better inventory management rules and regulations and better
management systems involving all three rigs, which Ahmed decided to work on.
Inventory optimization was a large-scale initiative at WPS. The thought of questions arising
at the meeting of “Why should we do this at all?” sent chills down Ahmed’s spine. As he
heard the rustling movement of the team members and the COO outside the meeting room,
Ahmed was dreading the response he would get. Would he be able to convey the importance
of this initiative with poise and confidence?
22/733 2023.
EXHIBIT 1: COST IMPACT OF NPT
NPT 2018 NPT Hours NPT Cost Impact

Percentage (USD)
Rig 1 648.25 8.04% 748,843.80
Rig 2 734.50 9.21% 825,000.00

Rig 3 658.50 8.06% 680,750.00
Total 2041.25 8.403% 2,254,593.75
Source: Company documents.
22/733 2023.
EXHIBIT 2: SAMPLE CLIENT EVALUATION FORM
Source: Company records.
22/733 2023.
EXHIBIT 3: INVENTORY ITEMS CONSUMED IN THE LAST TWO YEARS
Exhibit 3 (in the supplemental Excel file) shows the details of various inventory items held by
WPS in the past two years.
Column A: the serial number.

Column B: the number of units of each inventory item consumed in the past 2 years.
Column C: the locations where these inventory items were imported from.
Column D: the name of the inventory item.
Column E: the manufacturer from which the inventory was
bought. Column F: the distinct part numbers of the items.
Column H: the number of units held in the current inventory for each inventory item.
Column G: the units of measurement of inventory.
Column I: the price per unit.
Column J: the dollar value of each inventory item which was obtained by multiplying
Column H and Column J.
Some inventory items had a cost per unit of zero because these items had passed their
certified life.
Inventory Management at Westa Petroleum Services
EXHIBIT 4: SAMPLE SERVICE MATERIAL ORDER (SMO)
10
22/733C
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EXHIBIT 5: SAMPLE PURCHASE ORDER (PO)
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22/733 2023.
EXHIBIT 6: THE INVENTORY PROCESS
Source: Based on interview with the company.
22/733 2023.
EXHIBIT 7: SUMMARY OF EVENTS
Total hours
Date Event description Cause of event
of NPT
Rig 1
13-Jan-18 Wash pipe failure. 1 a
12-Feb-18 Top Drive System blower motor failure. 7 e

Mud pump # 3 piston and
17-Feb-18 2 a
seat replacement.
18-Feb-18 Drill string washout. 7.25 e
Replaced wash pipe and pressure test
7-Mar-18 a
the same.
Pull out of hole (wet pull) from 3987 m

to 2135 m. Found wash out in stand # 65
7-Mar-18 (2135 m from bit). Replaced drill pipe. 24 e
Record pressure @ 500 GPM. - OK
Run- in hole to bottom 3987m.
350 per square inch pressure drop,

suspected wash out in string. Pull out of
8-Mar-18 hole on elevator from 4025 m to 2154 15 e
M. Found washout in stand # 66 @ 2154
m, lay down same.
Washout – Pull out of hole from 4431
19-Mar-18 m to 4266 m. Pull out of hole slowly 28 e
because of tight hole.
Troubleshooting of human machine
21-Mar-18 3 e
interference screen.
Observed drop in pressure (750 per

square inch), pull out of hole 2764 m,
8-Apr-18 1 e
found washout in drill pipe (1 1/2" x 1/4"
near slip area), (2nd joint) lay down full
stand.
Pull out of hole changed bit & run-in
9-Apr-18 24 d
hole to shoe after washout.
Observed human machine interface

for controlling tripping speed not
10-Apr-18 working. Decided to repair the same 2.5 d
meanwhile kept string in cased hole
and work on human machine
interference.
Pull out of hole to 2,835 m. Lay
13-Apr-18 12 e
down washed out joint.
22/733 2023.
Total hours
Date Event description Cause of event
of NPT
Internal blow out preventer leakage,
pull out of hole 40 stand, replaced
16-Apr-18 4 e
Internal blow out preventer & Run-in
hole to bottom.
2-Jun-18 Top drive system main breaker tripped. e

Drill string parted while working on
17-Jun-18 d
stuck string.
18-Jun-18 7.5 d
stuck string.
19-Jun-18 24 d
stuck string.
20-Jun-18 24 d
stuck string.
21-Jun-18 24 d
stuck string.
22-Jun-18 24 d
stuck string.
23-Jun-18 24 d
stuck string.
Top drive system tripped due to

25-Jun-18 24 b
resistor grid heat up. Wait for cool
down.
Top drive system internal blow out
28-Jun-18 preventer leaked from crank. Pull out 15 a
of hole to shoe for changing.
Top drive system IBOP leaked from
crank. Pull out of hole to shoe, changed
29-Jun-18 22 a
internal blow out preventer & Run-in
hole back to bottom.
Pull out of hole from 3582 to 3505m.

Installed circulation head. Changed
12-Jul-18 upper internal blow out preventer & 34 b
press tested at 3000 per square inch - ok.
Washed down to BTM.
Draw works sprocket cracked. Rig shut

4-Aug-18 5 d
down. Arranged the same from oversees.
Draw works Sprockets cracked. Rig shut

4-Aug-18 290 d
down. Arranged the same from overseas.
22/733 2023.
Rig 2
CAM followers of the top drive
7-Feb-18 system internal blow out preventer 5 a
were replaced.
Top drive system electrical motor

breaks down. Replaced the same by
9-Mar-18 5 b and c
arranging it from sister rig. Preventive
maintenance not done due to lack of
spares.
Prior job safety meeting. Install, rig

up and function test Top drive
17-Mar-18 168 b and c
system.
Pressure test rotary hose and stand pipe
to 4500 per square inch - OK.
One main engine # break down. Shut
down operation. Repaired the engine
27-Mar-18 and restarted operation. Poor preventive 80 a
maintenance due to unavailability of
engine critical parts.
During run in hole observation one of
hydraulic hoses of Top drive system
9-Apr-18 15 c
leaking. Waiting on to arrange hose
from sister rig.
Top drive system hydraulic motor

stopped functioning. Spare not
9-Apr-18 194 c and d
available. Lay down top drive system.
Arranged to mobilize the spare motor
from oversee.
Prior job safety meeting, change dead
14-Jul-18 10 e
line anchor load cell.
Wash pipe leakage. Lack of preventive
maintenance due to spares back up. Pull
30-Jul-18 14 a
out of hole to shoe and changed the
wash pipe.
29-Aug-18 Blow out preventer tilt due to bop hoist. 8 e
30-Aug-18 Blow out preventer tilt due to bop hoist. 1.5 e
During bop test annular bop did

8-Sep-18 not function. Rig shut down. 234 c
Arranged replacement from
oversees.
Rig 3
Draw work motor energizing issue.
14-Feb-18 165 c
Back up motor not available on site.
5-Mar-18 Drill line over wrapped. e
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Standpipe union seal leakage. Seals not

7-Mar-18 50 c
in stock. Borrowed from sister rig.
Observed relay was not working

properly & Zener diode was shorted of
11-Mar-18 22 c
draw- works -rectified after getting
spares from sister rig.
Rig move excess time due to wait on
21-May-18 82 c
for damaged block raising lines.
Silicon current rectifier # 3 one phase of

reactor was ground and giving ground
24-May-18 fault. Spare reactor mobilized from 22 c
sister rig. Rectified after replacing the
reactor with 2 10 mm/80mm jumpers in
parallel.
Top drive system power loop cable got
25-May-18 e
in contact with the torque tube.
Observed leakage in bell nipple.
5-Jun-18 10 e
Rectified the same.
Mud pump piston issue. Waiting on
10-Jun-18 40 c
mud pump parts shipment.
Observed engine # 2 heated up + water

flowed from radiator + fan belt broke
22-Jun-18 down & tripped. Transformers heated c
up and burnt out. Rig power shut down.
Meanwhile pick-up string to 2186 m.
Step down transformer of Silicon

22-Jun-18 c
current rectifier burnt.
Step down transformer of Silicon

current rectifier burnt. Arranged the
transformer from Schlumberger,
23-Jun-18 21.5 c
mobilized and installed. Meanwhile pull
out of hole to shoe. Tested rig
equipment at different parameters. Run
in hole back to bottom.
Mud pump suction module cracked.
5-Jul-18 Spare not in stock. Replaced the same 75 c
after receiving from sister rig.
Worked on mud pump # 01.

6-Jul-18 Continue circulate with mud pump # a
02 & increased mw to 1.35 specific
gravity.
Worked on mud pump # 01 &
6-Jul-18 a
replaced piston on mud pump # 01.
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Replaced wash pipe. Meanwhile rotate

thru rotary table & circulate. Pressure
6-Jul-18 a
test wash pipe at 300 psi low & 3000
high - ok. .
10-Jul-18 Cont'd worked on mud pump # 01. a
Rig power shut down due to engine #
11-Jul-18 e
1 trip.
Observed mud pump # 01 seats washout.
15-Jul-18 Spares not available. Arranged from 35 c
sister rig.
Observed leakage from seal suction
16-Jul-18 module of mud pump # 01. Rectify 10 a
the same.
Observed leakage of oil from generator #

17-Jul-18 01. Replaced the gasket. a
Meanwhile circulate & slowed
down the pump.
Suction module of mud pump # 3

washed out. Spare module not available
17-Jul-18 45 c
in stock. Had the module repaired in
Karachi workshop and replaced the
same.
Worked on mud pump. Change piston
17-Jul-18 a
# 02 of mud pump # 02.
Rig power shut down due to faulty
electrical module. Repaired the same on
18-Jul-18 48 c
register and replaced. Spare module not in
stock.
During bop test, upper rams not holding
pressure, poor preventive maintenance
2-Aug-18 33 b
due to unavailability of spares.
Replaced the packer element.
a. Due to insufficient inventory, preventive maintenance couldn’t be done to avoid this

failure.
b. Due to no inventory, preventive maintenance couldn’t be done to avoid this failure.
c. Inventory was not available. Logistics of inventory from other locations/suppliers led
to non-productive time.
d. Due to no inventory available, replacement of defective part couldn’t be done to
save time.
e. Not related to inventory.
Source: Company documents and interviews.

Inventory Management at Westa Petroleum Services: HBP# HK1351

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The Oil and Gas Industry

Last edited: 23 June 2022

The NPT Issues

The Inventory Management at WPS

NPT 2018 NPT Hours NPT Cost Impact

Rig 2 734.50 9.21% 825,000.00

Total 2041.25 8.403% 2,254,593.75

Source: Company documents.

Source: Company records.

Column A: the serial number.

EXHIBIT 4: SAMPLE SERVICE MATERIAL ORDER (SMO)

EXHIBIT 5: SAMPLE PURCHASE ORDER (PO)

Source: Company records.

EXHIBIT 6: THE INVENTORY PROCESS

Source: Based on interview with the company.

EXHIBIT 7: SUMMARY OF EVENTS

12-Feb-18 Top Drive System blower motor failure. 7 e

Pull out of hole (wet pull) from 3987 m

350 per square inch pressure drop,

Observed drop in pressure (750 per

Observed human machine interface

2-Jun-18 Top drive system main breaker tripped. e

Top drive system tripped due to

Pull out of hole from 3582 to 3505m.

Draw works sprocket cracked. Rig shut

Draw works Sprockets cracked. Rig shut

Top drive system electrical motor

Prior job safety meeting. Install, rig

Top drive system hydraulic motor

29-Aug-18 Blow out preventer tilt due to bop hoist. 8 e

30-Aug-18 Blow out preventer tilt due to bop hoist. 1.5 e

During bop test annular bop did

Standpipe union seal leakage. Seals not

Observed relay was not working

Silicon current rectifier # 3 one phase of

Observed engine # 2 heated up + water

Step down transformer of Silicon

Step down transformer of Silicon

Worked on mud pump # 01.

Replaced wash pipe. Meanwhile rotate

Observed leakage of oil from generator #

Suction module of mud pump # 3

a. Due to insufficient inventory, preventive maintenance couldn’t be done to avoid this

Source: Company documents and interviews.

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