MANAGEMENT OF

CRUDE OIL
OIL & GAS INDUSTRY CHALLENGES

 UNIT 1: UPSTREAM, MIDSTREAM, AND DOWNSTREAM OPERATIONS

 1- Exploration, production, transportation, and refining processes.
 2- Environmental considerations and regulatory challenges.
 3- Supply chain complexities and logistics management.
 4- Technological advancements in exploration techniques.
UPSTREAM, MIDSTREAM, AND
DOWNSTREAM
OPERATIONS

 Upstream operations means identify deposits, drill wells and recover raw
materials (Hydrocarbon- oil & gases) from underground or sea.
 Midstream operations link the upstream and downstream bodies. In the simplest
terms the midstream industry can be described as the part of the process which
involves the shipping and storage of the oil.
 Downstream operations include refineries and marketing. These service area
turn crude oil into usable products such as gasoline, fuel oils and petroleum-based
products.
UPSTREAM, MIDSTREAM, AND
DOWNSTREAM
OPERATIONS
Exploration, production, transportation, and
refining processes.

 Exploration : the research and discovery of potential drilling and extraction sites
and reserves for crude oil. This is done by conducting multiple surveys, analyses,
and tests on the areas of interest
 Production : this phase aims to the recovery of the reservoir fluids to surface
followed by their processing. All production and maintenance activities are carried
out to meet strict safety and environmental policies and procedures
 Transportation : refers to the various methods of transportation used to move oil
from one location to another. These include pipelines, rail, shipping, and trucking
 Refining : convert (refine) crude oil into petroleum products for use as fuels for
transportation, heating, paving roads, and generating electricity and as feedstocks
for making chemicals.
5
Exploration, production, transportation, and
refining processes.

 Exploration :
 Production :
 Transportation :
 Refining :

6
Environmental considerations and
regulatory challenges.

 Environmental stewardship
- Oil and Gas industry most important
- Starts 1949 with land ethic
- 1980s and 1990s start to connect the
Economy with society and environment
- The regulatory is for sustainability
Framework
Environmental considerations and
regulatory challenges.
Environmental considerations and
regulatory challenges.
Supply chain complexities and logistics
management

 SUPPLY-CHAIN LINK IN THE OIL AND GAS INDUSTRY

Exploration → Production → Refining → Marketing → Consumer
This represent the major supply-chain links
The links represent the interface between companies and materials that
flow through
Exploration: includes seismic, geophysical and geological operations
production operations: drilling, reservoir, production, and facilities engineering.
Refining : a complex operation and its output is the input to marketing.
Marketing : retail sale of gasoline, engine oil and other refined products.
Supply chain complexities and logistics
management
 MANAGEMENT DECISIONS : supply-chain management involves
Configuration, Coordination and Improvement
Configuration involves :
1 what product-service bundle to produce
2-what portions of the bundle to produce in house and what portion to
purchase from others
3- facility capacity
4- location of facilities
5- type of technology to adapt
6- handling communications between suppliers and customers
7- standards expected of customers and suppliers
Supply chain complexities and logistics
management

Coordination from the perspective of each company involves :

1- ensuring supplier effectiveness in cost, timeliness and quality
2- setting appropriate targets for inventory, capacity, and lead time
3- monitoring demand and supply conditions
4- communicating market and performance results to customers and suppliers.
Improvement of the supply chain requires:
continuous evaluation and involves changing as required, the configuration
and/or the approach to coordination in order to enhance the performance of
the overall chain.
Supply chain complexities and logistics
management

Customize Your Logistics Network : It is a major part of a supply-chain.

- It is very important to deliver the product-service bundle in the quantities and
particularly, timing requirements set by the customer.
- Improvement of the supply-chain implies customization of the logistics network.
- The logistics network in an oil and gas company can be strengthened when
geologists, geophysicists, drillers, production engineers, reservoir managers,
facilities engineers, economic evaluators, financial analysts, marketing experts, and
government representatives come to evaluate the technical and economic
feasibility of an oil field development opportunity. foreign exchange risks, taxes, and
royalty issues.
- There are logistical challenges that are shared by both the operating company and
its suppliers to ensure that the right services, along with the right technical
configurations are delivered at the well site at the appropriate time.
Supply chain complexities and logistics
management
Technological advancements in exploration
techniques

 Digitalization and Automation: enables real-time monitoring and analysis of

production data, allowing for proactive maintenance and optimization of operations.
 Use of AI in the oil and gas sector: This innovative approach empowers
petroleum engineers and managers in the oil and gas sector to uncover and
implement fresh ideas for exploration and production directly in the field, ultimately
driving greater return on investment (ROI).
 Advanced Exploration Techniques: Technological advancements have greatly
impacted exploration activities in the oil and gas industry.
 Robotics and Drones: reducing the risks to human operators.
 Renewable Energy Integration: solar power, wind energy, and geothermal
energy to reduce carbon emissions and improve sustainability. This reduces
greenhouse gas emissions and also lowers operational costs in the long run.
Technological advancements in exploration
techniques
UNIT 2: INDUSTRY STRUCTURE, PLAYERS,
AND TRENDS

 Major oil and gas companies (supermajors, independents,

national oil companies).
 Service providers (drilling contractors, equipment
manufacturers, etc.).
 Market trends (renewable energy integration, digitalization,
energy transition).
 Geopolitical influences on the industry.
Major oil and gas companies

 Oil companies is on of the most profitable companies in the world

 The companies stuck play a key role on the global economy
 The most attractive for investors
 Long term investment
 Affected by the local and international events
Major oil and gas companies

Co. name Nationali Shar Market Nots

ty price capitalization
ExxonMobil USA 115 $ 515 B USD Biggest profit on the shar
Shell UK 72 $ 179 B USD Interested in clean energy
Chevron USA 156 $ 288 B USD Foxed on oil exploration and
N.gas
Bp UK 36 $ 100 B USD Renewable energy and
reducing Co2
Service providers

 Drilling contractors
 Equipment manufacturers
 Engineering solution providers
 Concrete pouring
 Sludge and waste collectors
 catering and anther services
Market trends

 renewable energy integration:

- To improve environment
- To achieve standards
- Adding market value
- Reduce cost
Market trends

 Digitization : is the convert from analog information into digital

format ( pictures, PDF, Excel …)
- To improve efficiency and data transparency
- No information loos
- Fast information sharing
- Fast access and reporting more aqourtly
Market trends

 Digitalization : the use of digital technologies to change a business

model
- provide new revenue
- Adding value
- producing opportunities
- Smart digitalization will measure and optimize the service and will
control all the plant
- Reduce the cost and the faults
Market trends

 Digital transformation :
-Represent the impact caused by the process of the digitalization
-The most important element used by all companies is data
- How to have the information fast, aquert and analyzed
- Will give the best ROI for the investors
Market trends
Geopolitical influences on the industry

 Oil and Gas is the most important to move and drive all the world
- The market will be effected by sanctions, wars, conflicts supply problems.
- The demand is allows growing and the supply is short
- Examples :
1- Gulf war (Strait of Hormuz)
2- Ukraine Russia war ( Russia is 2nd Gas producer, 3ed oil producer, 1st Gas
exporter, 2nd oil exporter)
3- Middle east conflict ( Saudi Arabia, Kiewit, UAE, Iran and Strait of Hormuz)
4- insurance companies
5- OPEC production cut
MANAGEMENT PRINCIPLES

 PRINCIPLES OF MANAGEMENT
 LEADERSHIP AND ORGANIZATIONAL BEHAVIOR
 STRATEGIC MANAGEMENT
 OPERATIONS MANAGEMENT
PRINCIPLES OF MANAGEMENT

 Organizational hierarchy and decision-making frameworks.

 Resource allocation (capital, human resources, technology).
 Performance measurement and KPIs.
 Change management strategies
Organizational hierarchy and decision-making
frameworks

 Depending on the company strategy, services

- Conceptual management framework
- Organizational structure
- Application structure
- Decision making structure
It is connected to the decision maker flow, type of contract and budget
Organizational hierarchy and decision-making
frameworks
Resource allocation

 Capital
- Realize the Most Value
- the project infrastructure and increasingly sophisticated demands
from regulators and other stakeholders are creating a perfect storm,
which is placing capital planning practices under pressure.
- ensuring that the right things are being done right, and that these
activities support your organization’s strategic objectives.
- economics and risk
- Identify the optimal set of investments, alternatives, and timing that
will deliver the greatest value while respecting all constraints
Resource allocation

 human resources
- staff description, training and compensation
- performance management
- labor in an industry with unique demands including its global nature
- the importance of safety
- the involvement of governments, proactive stakeholders
- multifaceted workforce
Resource allocation

 Technology
- Collecting Data to achieve the company target
- Reporting on time for the diction makers
- on time Monitoring
- Using the fast and on time communication
Resource allocation

 resource allocation in Oil & Gas refers to the strategic process of

assigning and managing various resources – including personnel,
equipment, materials, and even financial capital – to specific activities
within a project.
 Defining resource requirements: Identifying the specific personnel,
equipment, and materials needed for each project phase.
 Estimating resource availability: Assessing the availability of
resources within the organization and potential external sourcing
options.
 Allocating resources: Assigning the identified resources to specific
activities, considering factors like resource skills, availability, and cost.
 Monitoring and adjusting: Continuously tracking resource utilization,
identifying potential bottlenecks, and making adjustments as needed to
maintain optimal efficiency.
Resource allocation

 Why is Resource Allocation Crucial in Oil & Gas?

- Maximizing Project Efficiency: By ensuring resources are allocated
effectively, projects can proceed smoothly, minimizing delays and cost
overruns.
- Controlling Costs: Proper resource allocation helps organizations
avoid overspending by minimizing unnecessary resource utilization and
ensuring resources are utilized optimally.
- Improving Project Scheduling: By considering resource availability
and constraints, projects can be more accurately scheduled, leading to
improved project timelines and delivery.
- Mitigating Risks: Resource allocation helps identify potential resource
shortages early on, allowing for timely adjustments and mitigation of
project risks.
Resource allocation

 Key Challenges in Resource Allocation for Oil & Gas:

- Complex Projects: Oil & Gas projects often involve diverse and
intricate tasks, demanding a wide range of resources, making efficient
allocation challenging.
- Dynamic Environment: Unforeseen events, like equipment failures or
supply chain disruptions, can significantly impact resource availability
and require rapid adjustments.
- Resource Constraints: Limited access to specialized personnel,
equipment, or materials in remote locations can pose significant resource
constraints.
- Data Management: Efficient resource allocation demands accurate
and up-to-date data on resource availability, utilization, and cost,
requiring robust data management systems.
Resource allocation

 Technology's Role in Enhancing Resource Allocation:

Fortunately, advancements in technology are playing a significant role in
streamlining and optimizing resource allocation in the Oil & Gas industry:
- Resource Management Software: Specialized software solutions provide
comprehensive tools for planning, tracking, and managing resources, facilitating
informed decision-making and resource optimization.
- Cloud-Based Collaboration: Cloud platforms enable real-time data sharing and
collaboration across teams, ensuring everyone has access to the latest resource
information.
- Artificial Intelligence (AI): AI algorithms can analyze historical data and
predict future resource needs, aiding in proactive resource planning and
preventing potential shortages.
- Data Analytics: Advanced analytics tools provide insights into resource
utilization patterns, helping identify inefficiencies and optimize resource
deployment.
Performance measurement and KPIs

 Key performance indicators—Definition, basic overview, and

applications for any business
 Oil and gas industry—KPIs to lower costs, improve safety and
productivity, and meet clean energy objectives
 Onshore—Asset utilization, workforce productivity, and customer
satisfaction
 Offshore—Safety, production, cost, and environment
 Downstream—Yield, energy consumption, overall equipment
effectiveness (OEE)
 Oil and gas KPI dashboard—Keeping a competitive edge
Performance measurement and KPIs

 Onshore: Key performance indicators for the oil and gas

industry
- Safety, production, cost, and environmental metrics are also
important for the onshore oil and gas industry. Additional KPIs for this
sector can involve asset utilization, workforce productivity, and
stakeholder satisfaction.
- Asset utilization: measures how effectively the uses assets, such as
drilling rigs, pipelines, and storage tanks.
- Workforce productivity: measures the productivity of personnel,
such as the number of barrels produced per employee or the number
of wells drilled per crew.
- Customer satisfaction: measures the satisfaction of customers such
as oil and gas buyers and landowners.
Performance measurement and KPIs

 Offshore: Key performance indicators for the oil and gas

industry
- Safety: The offshore oil and gas industry prioritizes safety. Therefore,
the industry employs many strategies to measure safety performance.
- Production: Metrics to track production include total production
volume, production efficiency, and uptime. These KPIs show up in
company annual reports, investor presentations, and industry reports.
- Cost: Cost control is critical, this will measure cost performance,
capital expenditure (CAPEX), operating expenditure (OPEX), and unit
production cost.
- Environment: measure environmental impact, such as greenhouse
gas emissions, energy intensity, and water usage.
Performance measurement and KPIs

 Downstream: Moving downstream to refinery operations introduces

other performance nuances.
- Yield: measures the amount of finished product from a given amount
of raw material. As one of the most critical KPIs for refining operators,
it directly impacts profitability.
- Energy consumption: The refining industry places a heavy
emphasis on energy consumption. Given the energy-intensive nature
of the operations, measuring the amount of energy required to
produce a unit of product serves as a valuable KPI.
- Overall equipment effectiveness: OEE, a commonly used KPI,
measures the performance of equipment to identify opportunities for
improvement. This metric is calculated as a factor of availability,
performance, and quality.
Change management strategies

 technology adoption effectively 75 %

 reasons:
1- Reducing resistance to change
2- Improving communication
3- Increasing employee engagement
4- Minimising disruption
Change management strategies

 change management models

1- The ADKAR Model

2- The Kotter Model
3- The Lewin Change Model
Unit 4 : LEADERSHIP AND ORGANIZATIONAL
BEHAVIOR

 Leadership styles
 Team dynamics and effective communication.
 Motivation theories
 Managing diversity in multicultural teams.
Leadership styles

 Transformational leadership
 Situational leadership
 Servant leadership
 Agile leadership
 Collaborative leadership
 Anther consider
Team dynamics and effective communication

 1-Define clear goals and expectations

 2-Choose the right tools and channels
 3-Provide feedback and recognition
 4-Listen actively and empathetically
 5-Adapt to different situations and styles
 6-Review and improve your communication
 7- what else to consider
Motivation theories

 Exploring Maslow’s Hierarchy of Needs

 Herzberg’s Motivation & Hygiene Factors
 Pink’s Theory of Motivation
Managing diversity in multicultural teams

 The world’s most successful companies have something in

common: they know the power of having a diverse workforce
 1. Avoid a single-culture bias
 2. Build your cultural intelligence
 3. Structure your teams mindfully
 4. Avoid stereotypes and keep an open mind
 5. Handle feedback and criticism with care
Managing diversity in multicultural teams

 6. Clarify expectations
 7. Nip issues in the bud
 8. Diversify leadership
 9. Hire experienced multicultural leaders
 10. Invest in language training for non-native speakers
Unit 5 STRATEGIC MANAGEMENT

 SWOT analysis (strengths, weaknesses, opportunities, threats).

 Competitive advantage and differentiation strategies.
 Strategic planning and implementation.
 Balancing short-term goals with long-term vision
SWOT analysis

 What Is SWOT Analysis?

 Understanding SWOT Analysis
 Components of SWOT Analysis
 Benefits of SWOT Analysis
1- makes complex problems more manageable
2- requires external considerations.
3- can be applied to almost every business question
4- leverages different data sources
5- may not be overly costly to prepare.
Competitive advantage and differentiation
strategies

1- What is competitive differentiation?

2- What is competitive advantage?
3- How to define competitive differentiation and competitive advantage
in your GTM strategy?
4- Why are competitive differentiation and competitive advantage
important for your GTM strategy?
5- How to achieve competitive differentiation and competitive advantage
in your GTM strategy?
Strategic planning and implementation
Strategic planning and implementation
Balancing short-term goals with long-term vision
Unit 6 OPERATIONS MANAGEMENT

 Production optimization (reservoir management, well drilling, etc.).

 Supply chain efficiency (inventory management, procurement).
 Health, safety, and environmental considerations.
 Quality control and process improvement
Production optimization

 What is Production optimization?

 the most effective production optimization
1- Reservoir management
2- Well intervention
3- Artificial lift
4- Surface facility optimization
5- Data analytics
6- Continuous improvement
Supply chain efficiency

 Procurement
1- highly competitive arena
2- transparency and accountability
3- reduction in purchase costs
4- technology
 inventory management
Health, safety, and environmental considerations

 Health Risks
 Safety Concerns
 Environmental Impact
 Risk Assessment
 Training and Awareness
 Emergency Response Planning
Statistics:
1- IOGP HSE practices have a 50% lower incident rate
2- OSHA HSE practices can reduce workplace injuries by up to 40%.
3- API investing in HSE practices see a 20% improvement in operational
efficiency
Quality control and process improvement

 What is quality control in the oil and gas industry?

 what is process improvement in the oil and gas industry?
 Why Improvement?
1- Cost Reduction
2- Efficiency Enhancement
3- Quality Assurance
Quality control and process improvement

 Key Steps in Process Improvement

1- Data Collection and Analysis
2-Identifying Bottlenecks
3- Implementing Technological Solutions
 Best Practices in the Oil and Gas Industry
1- Continuous Training
2- Regulatory Compliance
3- Stakeholder Collaboration
Module 3 PROCUREMENT AND TENDERING
PROCESSES

 PRE-QUALIFICATION REQUIREMENTS AND PROCEDURES

 EVALUATING BIDDERS’ LEGAL, HSEQ, FINANCIAL, AND TECHNICAL
CAPABILITIES
 BID PREPARATION AND PROPOSAL WRITING
 TENDER EVALUATION AND CONTRACT AWARD
Unit 7 PRE-QUALIFICATION REQUIREMENTS
AND PROCEDURES

 Vendor assessment criteria (financial stability, technical capabilities).

 Document submission (company profiles, certifications, references).
 Pre-qualification audits and site visits.
 Compliance with industry standards (ISO, API, etc.).
Unit 8 EVALUATING BIDDERS’ LEGAL, HSEQ,
FINANCIAL, AND TECHNICAL CAPABILITIES

 Legal due diligence (contracts, licenses, litigation history).

 Health, safety, environment, and quality (HSEQ) compliance.
 Financial stability and creditworthiness.
 Technical expertise (previous projects, equipment capabilities).
Unit 9 BID PREPARATION AND PROPOSAL
WRITING

 Crafting compelling bids (technical proposals, commercial terms).

 Pricing strategies (cost-plus, fixed-price, etc.).
 Risk assessment and mitigation in bids.
 Presentation skills for bid defense.
Unit 10 TENDER EVALUATION AND
CONTRACT AWARD

 Objective evaluation criteria (weighted scoring, cost-benefit analysis).

 Negotiating terms and conditions.
 Awarding contracts based on merit.
 Post-award contract management.
Module 4 CONTRACT LAW AND COMMERCIAL
AGREEMENTS

 CONTRACT TYPES, STRUCTURES, AND CLAUSES

 CONTRACT NEGOTIATION STRATEGIES AND TECHNIQUES
 CONTRACT MANAGEMENT
CONTRACT TYPES, STRUCTURES, AND
CLAUSES

 Different contract models (fixed-price, cost-reimbursable, lump-sum).

 Key contract clauses (scope of work, payment terms, force majeure).
 Legal implications of contract language.
 Risk allocation through contract provisions.
Different contract models

 Most famous
1- fixed-price
2- cost-reimbursable
3- lump-sum
Key contract clauses

 scope of work
 payment terms
 force majeure
Legal implications of contract language

 Parties
 Agreement
 Legality
 Terms and conditions
 Warranty
 Breach
Risk allocation through contract provisions

 Risk ID
 Communication
 Contract Agreements
 Monitoring
CONTRACT NEGOTIATION STRATEGIES AND
TECHNIQUES

 Win-win negotiation principles.

 BATNA (Best Alternative to a Negotiated Agreement).
 Concession management and trade-offs.
 Cultural considerations in international negotiations
Win-win negotiation principles

 Win-win guidelines
1- Adopt right attitude
2- search for mutual gains
3- sell hidden benefits
BATNA (Best Alternative to a Negotiated
Agreement)

 BATNA guidelines
1- you need to know both parties strengths
2- you need to know the Min that can agreed on
3- good communications
Concession management and trade-offs

 Concession guidelines
1- plan and prioritize
2- communicate concessions
3- avoid common pitfalls
Cultural considerations in international
negotiations

 Cultural guidelines
1- understanding cultural differences
2- understanding communication
3- understanding team cultural
4- understanding cultural styles
CONTRACT MANAGEMENT

 Post-award responsibilities (monitoring performance).

 Handling disputes (mediation, arbitration, litigation).
 Compliance with contract terms.
 Documenting variations and amendments
Module 5 RISK MANAGEMENT AND DISPUTE
RESOLUTION

 IDENTIFYING AND MITIGATING CONTRACTUAL RISKS

 INSURANCE, GUARANTEES, AND OTHER RISK TRANSFER MECHANISMS
 CONFLICT RESOLUTION APPROACHES
IDENTIFYING AND MITIGATING
CONTRACTUAL RISKS

1. Risk Identification
2. Risk Assessment
3. Risk Prioritization
4. Risk Mitigation
5. Risk Monitoring
IDENTIFYING AND MITIGATING
CONTRACTUAL RISKS

 Risk assessment matrices.

 Risk registers and risk treatment plans.
 Contingency planning.
 Risk communication within project teams
Risk assessment matrices

 5x5 Risk Assessment Matrix

 1- What is a 5×5 Risk Matrix?
 2- Why Use a 5×5 Risk Assessment
Matrix?
 3- Calculation :Probability x Impact =
Risk Level
Risk registers and risk treatment plans
Risk registers and risk treatment plans
Contingency planning
Risk communication within project teams
Risk communication within project teams
Risk communication within project teams
INSURANCE, GUARANTEES, AND OTHER RISK
TRANSFER MECHANISMS

1. Insurance
2. Hedging
3. Self-insurance
4. Comparing options
CONFLICT RESOLUTION APPROACHES

1. Active Listening
2. Proficiency in Communication
3. Mediation
4. Negotiation
5. Conflict Mapping
6. Brainstorming
7. Conflict Resolution Models
8. Emotional Intelligence (EQ)
9. Training and Workshops
10. Alternative Dispute Resolution (ADR)
11. Counseling and Coaching
12. Feedback and Evaluation
Module 6 CASE STUDIES

- EVALUATING SAMPLE BIDS AND PRE-QUALIFICATION

SUBMISSIONS
 Analyzing bid documents (technical, commercial, legal).
 Assessing compliance with evaluation criteria.
 Identifying strengths and weaknesses.
Module 6 CASE STUDIES

- NEGOTIATION ROLE-PLAYING AND SIMULATIONS

 Simulating real-world negotiation scenarios.
 Applying negotiation tactics learned in class.
 Feedback and improvement based on performance
Module 6 CASE STUDIES

- APPLYING CONCEPTS TO REAL-WORLD OIL & GAS PROJECTS

 Integrating course knowledge into practical situations.
 Solving industry-specific challenges.
 Collaborating with peers to find innovative solutions