The oil and gas global supply chain comprises of activities like materials handling, domestic and international transportation, ordering and inventory visibility and control, information technology, as well as import and export facilitation. The supply chain in large industries always tends to involve management, configuration, and continuous improvement of a sequential set of operations that involve several parties. The goal of supply chain management is to provide the best possible service to customers at an affordable price. The oil and gas supply chain can be analyzed through three different industry sectors, which are upstream, midstream and downstream. Paul Favret is largely associated with the upstream sector.
Paul Favret briefly discusses the upstream, midstream and the downstream sectors
The generic business terms, “upstream” and “downstream” are widely used by people today when it comes to describing a company or service associated with the oil and gas supply chain. As a service or company gets closer to servicing the end user, the more downstream are they located in the supply chain. Each of these sectors has its very own features and processes.
The upstream sector is known as the exploration and production, or E&P sector. It features operations and processes that involve the search for potential underwater or underground natural gas or crude oil fields, drilling of exploratory wells, as well as drilling and operating the wells that recover and brings crude oil or raw natural gas to the surface. Over the last few years, an evident shift has been observed toward the inclusion of unconventional gas as a part of the upstream sector. This also impacts the developments associated with the transportation and processing of Liquefied Natural Gas or LNG.
The midstream sector is at times combined with the downstream sector, but it does have very important processes specific to it. In the supply chain, this segment involves the storage, transportation and marketing of discerning gas and oil products. Transportation options required may range from small connector pipelines to huge cargo ships that are meant for trans-ocean crossings, based on the commodity and distance involved. Most oil can be transported in its current state, but natural gas needs to be compressed or liquefied.
Downstream oil and gas sector encompasses the processing, refining, distillation and purification of oil and gas, before they can be turned into usable and consumable products like fuel oils, petroleum-based products and gasoline. Retail marketing activities aid in moving the finished products from the energy companies to the end-users or retailers.
The key business features of the downstream sector are that is the margin business, which essentially has a high degree of complexity. Companies need to have a global perspective in mind, and work with marketing and delivery of final products to retailers and end users, for the best possible outcomes.
The oil and gas industry are quite dynamic and features a lot of knowledgeable professionals like Paul Favret. He is long-time energy, oil, and gas sector professional and has a vast experience as a CEO, president, and founder of many firms.