By this time you must have already understood that The Oil and Gas industry is usually divided into three major sectors:
In this blog I would concentrate on Downstream industry.
In case you want to know about Upstream, you can check my previous blog: http://scn.sap.com/community/oil-and-gas/blog/2015/04/27/upstream-industry-process-overview-sap-solu...
Let’s focus on what Downstream Industry does
Crude Procurement - Procuring by refining of crude oil, and the selling and distribution of natural gas and products derived from crude oil. Such products
include liquefied petroleum gas (LPG), gasoline or petrol, jet fuel, diesel oil, other fuel oils, asphalt and petroleum coke.
Includes oil refineries, petrochemical plants, petroleum product distribution, retail outlets andnatural gas distribution companies.
Trading & Risk Management - Trading enables this oil to flow worldwide from areas of supply to demand. While trading happens at a geographic level from one country to
another, international oil companies also trade to improve their performance across the whole value chain.
Different Markets for Petroleum Trading like Contract Market, Spot Market, OTC Paper Market, and Exchange Paper Market.
Refining - 3 step process followed in refinery are SeparationàConversionàTreatment. In a process of reining, crude is essentially broken down into components like
LPG’s, Light Distillates, Residual Fuel oil etc.
Distribution – A few step process followed in Distribution are Oil field - >Refinery - >Terminal - >End User.
Pipeline, Shipping & Rail Method are used up to the distribution to terminal and this is called primary distribution and remaining are called as secondary distribution.
Marketing & Retail - Marketing refers to distribution and sale of refined product beyond the refinery gate. Can be in form of bulk shipments from a refiner to wholesaler
and sale of branded lubricants in supermarkets.
Wholesale marketing refers to trade with large-scale customers and trade in global markets or on the various exchanges (NYMEX, IPE) (Business to Business - B2B).
Retail marketing represents the final part of the oil and gas chain. It encompasses thesale of petroleum products to the end-use markets (Business to Consumer - B2C).
Downstream Facts & Figures
Downstream Industry highlights are as follows:
Downstream Operations Value Chain
The important sap modules applicable for downstream except standard functional modules (FICO,SD,MM,Logistics, PS, PM etc.) are as follows:
Now let’s talk about Costs that are incurred in the Downstream Industry
Major Costs will occur in Downstream Industry:
It’s also important for us to know about associated cost objects in the Downstream Industry
In a typical Downstream implementation projects, the Cost Objects are treated as follows:
Downstream Implementation Prerequisite
Each implementation project irrespective of industry has its own share of challenges & risks and Downstream Implementation also is not an exception.
Downstream Implementation Challenges
Downstream Implementation Risks
Downstream Implementation risks are divided into two parts.
Process Perspective:
SAP Solutions Perspective:
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