Supply chain management in the oil and gas industry
Expert-defined terms from the Professional Certificate in Petroleum Economics course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Supply Chain Management in the Oil and Gas Industry #
Supply Chain Management in the Oil and Gas Industry
Supply chain management in the oil and gas industry encompasses the planning and… #
It involves the coordination of various stakeholders, including suppliers, manufacturers, distributors, and customers, to ensure the smooth flow of products from the point of extraction to the end-user.
Acquisition Cost #
Acquisition Cost
The cost associated with acquiring oil and gas assets, including exploration, dr… #
This cost is a critical factor in determining the profitability of oil and gas projects.
Barrel of Oil Equivalent (BOE) #
Barrel of Oil Equivalent (BOE)
A unit of measurement used to compare and aggregate different types of energy co… #
It represents the energy content of one barrel of crude oil and is commonly used in the oil and gas industry for financial and operational analysis.
Contract Management #
Contract Management
The process of managing contracts between companies in the oil and gas industry,… #
Effective contract management is essential for ensuring compliance, minimizing risks, and optimizing cost savings.
Downstream Operations #
Downstream Operations
The segment of the oil and gas industry that involves refining, processing, and… #
Downstream operations focus on adding value to crude oil by converting it into various products such as gasoline, diesel, and jet fuel.
Exploration and Production (E&P) #
Exploration and Production (E&P)
The upstream segment of the oil and gas industry that involves the exploration,… #
E&P companies are responsible for finding and extracting hydrocarbons from the earth's surface.
Forecasting #
Forecasting
The process of predicting future demand for oil and gas products based on histor… #
Accurate forecasting is essential for effective supply chain management to ensure that the right amount of products is available at the right time.
Greenfield Project #
Greenfield Project
A new oil and gas project that is developed on previously undeveloped land or in… #
Greenfield projects require significant investment in infrastructure, technology, and resources to bring the project to fruition.
Hydrocarbon #
Hydrocarbon
A compound made up of hydrogen and carbon atoms, including oil and gas products… #
Hydrocarbons are the primary energy source for the oil and gas industry.
Inventory Management #
Inventory Management
The process of overseeing and controlling the storage, handling, and distributio… #
Effective inventory management helps minimize costs, reduce waste, and ensure product availability.
Joint Venture (JV) #
Joint Venture (JV)
A business arrangement in which two or more companies collaborate to undertake a… #
JVs are common in the industry to share risks, resources, and expertise.
Key Performance Indicators (KPIs) #
Key Performance Indicators (KPIs)
Quantifiable metrics used to evaluate the performance of supply chain management… #
KPIs help measure efficiency, effectiveness, and overall success in meeting strategic objectives.
Logistics #
Logistics
The process of planning, implementing, and controlling the movement and storage… #
Logistics involves transportation, warehousing, inventory management, and distribution.
Master Service Agreement (MSA) #
Master Service Agreement (MSA)
A long #
term contract between a company and a supplier that outlines the terms and conditions for the provision of goods or services. MSAs are common in the oil and gas industry to establish a framework for ongoing business relationships.
Natural Gas Liquids (NGLs) #
Natural Gas Liquids (NGLs)
Hydrocarbon liquids, including ethane, propane, butane, and pentane, that are ex… #
NGLs are valuable by-products of natural gas production and are used as feedstocks for petrochemicals and other industries.
Oilfield Services #
Oilfield Services
Companies that provide specialized services and equipment to the oil and gas ind… #
Oilfield services companies play a vital role in supporting E&P activities.
Procurement #
Procurement
The process of acquiring goods and services from external suppliers to support t… #
Procurement involves sourcing, negotiation, contracting, and supplier management to ensure cost-effective and timely delivery.
Quality Control #
Quality Control
The process of monitoring and evaluating the quality of oil and gas products thr… #
Quality control measures are implemented to ensure that products meet industry standards and customer requirements.
Reservoir Management #
Reservoir Management
The process of optimizing the production of oil and gas reserves using technical… #
Reservoir management involves reservoir modeling, well performance analysis, and production forecasting.
Strategic Sourcing #
Strategic Sourcing
The process of identifying, evaluating, and selecting suppliers based on criteri… #
Strategic sourcing aims to build long-term partnerships with suppliers to achieve competitive advantages.
Transportation #
Transportation
The movement of oil and gas products from production facilities to refineries, s… #
Transportation methods include pipelines, tankers, trucks, and railroads, depending on the distance and volume of products.
Upstream Operations #
Upstream Operations
The segment of the oil and gas industry that involves the exploration, drilling,… #
Upstream operations focus on locating and extracting hydrocarbons from the earth's surface.
Value Chain #
Value Chain
The sequence of activities that add value to oil and gas products from raw mater… #
The value chain includes upstream, midstream, and downstream activities that contribute to the overall value of the products.
Wellhead Price #
Wellhead Price
The price at which oil and gas producers sell their products at the wellhead bef… #
Wellhead prices are influenced by market demand, supply dynamics, and geopolitical factors.