Transforming the production structure of a gas-production enterprise
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~40%
of Ukraine's total gas production
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3,000+
enterprise employees
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90+
production facilities across 5 regions
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+19%
rise in the effectiveness of daily operations
Context
Initial state
The team was engaged to transform the production structure of the largest gas-production asset among Ukraine’s state-owned companies — an enterprise that accounted for about 40% of the country’s total gas production. The scale of the operating system: 3,000+ employees, ~90 production facilities across 5 regions and around 50 communities.
A centralized management model held back the development of operations and created constraints on delivering new projects. All operational and project activity was managed from the head office through functional lines that were duplicated at the level of regional production units — with no clear distribution of responsibility between operational and project teams.
Project details
- Industry
- Oil-and-gas enterprise
- Area
- Production structure transformation
- Production share
- ~40% of Ukraine's total gas production
- Scale
- 3,000+ employees, ~90 facilities, 5 regions
- Rise in operational effectiveness
- +19%
- Administrative-staff optimization
- −20%
The problem
A centralized management model as a constraint for a nationwide enterprise
The centralized management structure, built for a smaller scale, had outgrown its capabilities. Delays in operational decisions, constant conflicts between functional lines, and blurred areas of responsibility had become systemic — and directly affected production results and project delivery.
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An ineffective system for managing operations
Centralized management through functional lines did not provide decision speed for an enterprise spanning 5 regions
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No split between operational and project teams
Operations and the delivery of new drilling projects ran in a single organizational loop with no clear separation — leading to conflicts over priorities and resources
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Constant conflicts between units
The duplication of functions between the head office and regional units generated systemic conflicts and slowed decision-making
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Inefficient use of resources
The absence of clear areas of responsibility led to an irrational allocation of human, technical, and financial resources across lines
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Low motivation and accountability
Blurred areas of responsibility made a fair assessment of results impossible — and lowered the motivation of regional unit heads
How the problem was identified
There were systematic delays in important operational decisions and constant conflicts between functional lines and between the head office and regional units. Analysis revealed the absence of clear areas of responsibility for operational work and for the results of key projects — as the systemic cause of declining effectiveness.
The solution
Steps in transforming the structure
We delivered a transformation of the production structure that separated operational and project activity, decentralized management, and formed regional centers of responsibility.
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Diagnosing the current organizational structure
We studied the existing structure, identified the key problems, and assessed them by level of risk and impact on the enterprise's strategic goals.
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Developing a transformation plan
We developed a plan of transformation measures with a clear sequence of steps, owners, and delivery timelines.
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Communicating the transformation
We conducted systematic communication with leaders at every level — the head-office teams and the regional units. We gathered feedback and determined the level of support, the main risks, and the shortcomings.
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Adjusting the plan and managing risks
On the basis of the feedback, we approved corrective measures and a plan for managing the transformation's risks.
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Separating operational and project activity
We clearly separated the areas of management and responsibility for operational and project results at the head-office level. The organization of project work was handed to the project management office.
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Decentralizing management
On the basis of an audit of decision-making areas, we increased the powers of regional heads. At the same time, we handed them additional resources to manage: geological services, compressor stations, mechanical and energy services, and the transport operations.
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Creating regional management centers
On the basis of an analysis of logistics flows and the geographic structure, we decided to integrate the production units by creating two key regional production centers — with a full cycle of operational responsibility at the regional level.
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Implementing the new structure
We carried out the organizational changes and organized systematic, regular meetings to control implementation status. We delivered corrective measures where needed.
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Assessing leaders and providing support
We assessed the leaders in the key positions of the new structure. We provided ongoing informational, organizational, and resource support throughout the transformation project.
Results
Measurable achievements after the transformation
We implemented an effective portfolio approach to organizing the enterprise’s management, with a clear split between operations, project programs, and corporate functions. The enterprise gained not only improved operational indicators but a scalable organizational model able to manage a complex, geographically distributed production system effectively and to deliver ambitious strategic production-growth goals.
Before the transformation
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A centralized management model
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Mixed operational and project teams
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Duplication of functions across levels
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Conflicts between units
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Excess administrative staff
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Delays in operational decisions
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Low operational effectiveness
After the transformation
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Two regional centers of operational management
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A clear split: operations — PMO — corporate functions
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Decentralized powers with transferred resources
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Clear, non-overlapping areas of responsibility
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Staff optimized by 20%
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Fast response at the regional level
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#ERROR!
