Oil production
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Oil production
Specifics of oil production activity
- Large scope of warehouse facilities (hundreds of warehouses, hundreds of thousands of cubic meters of areas).
- Significant amount of dangerous facilities and cargos from the point of view of provision with industrial safety.
- Large fleet of special equipment of various application.
- Tens of thousands of inventory items with various conditions of storage, large scope of delivery time, presence of monopoly suppliers.
- Significant territorial remoteness of warehouse, production and service facilities
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- Insufficient development of transport and information infrastructure.
- Specific geoclimatic conditions.
- Nondetermination of demand for goods and commodities (not clear dependence between quantity of purchased goods and commodities from product quantity, i.e. extracted oil).
- Importance of following rules of industrial safety and labor protection in transporting large-size and heavy cargo.
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Solving logistics tasks in oil production significantly influences on reduction of oil prime cost. It is very important to set up properly goods and commodities stock management system in procurement (including book-keeping of maintenance fund, identification and sale of illiquid assets),
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Permanently increase efficiency of dispatch service and delivery of commodities, as well as crew facility for capital and current well repair, to improve interaction with transport and other service companies.
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The following problematic areas can be determined taking into consideration specifics of oil production:
In warehouse facility management
- Decentralized warehouse facilities management. Warehouse areas are managed by many divisions, i.e. procurement, units and NGDU, extraction units, service departments and etc.
- Irrational use of warehouse facilities, as a rule, floor storing only or in piles.
- Many warehouse facilities neither have automated control systems nor provide operative access to data from joint centre.
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- Warehouse processes are nor regulated neither standardized. Each warehouse organizes work based on ‘piercing holes’ principle learning from own mistakes.
- Weak regulative base of warehouse operations and loading and off-loading work.
- Irrational use of warehouse facilities, all-out methods of work in combination with idle time of equipment and personnel.
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In stock management
- Low turnover of stocks on significant inventory items and as a result ‘frozen’ significant turnover assets.
- Weak regulative base on standardizing stocks of commodities and goods.
- Significant share of ‘illiquid’ goods and commodities.
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- Non-determined demand for many inventory items (first of all, for maintenance and exploitation needs).
- Absence of regulated procedures for operational identification and sale of ‘illiquids’.
- Noticeable loss of commodities and goods due to damage and theft.
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In transportation management
- Inefficient routing schemes, incomplete loading, idle lifts, idle time of transport.
- Irrational system of transport services consumption, quantity of provided transport is connected with real volume of transport work.
- Unset up system of operative coordination of capacity, rates and requirements of warehousing facilities, transport and production.
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- 30%–40% of current maintenance delay in renovation of wells due to tardiness of special transport operations.
- Weak system of dispatching and transport work organization (organization of centralized delivery). Significant share of self-delivery.
- Weak regulatory base on standardizing transport operation.
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Our experts have practical experience of logistics optimization in oil production sphere and are ready assist you in significant reduction of oil prime cost through utilization of logistics approaches.
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Solution of logistics tasks in oil producing companies assist to achieving of the following indicators:
| Indicator |
Outcome |
| Reduction of order satisfaction level of customers in procurement system |
up to 95–97% |
| Reduction of warehouse stocks |
by 25–30% |
| Reduction of order execution time |
by 15–20% |
| Reduction of warehouse costs |
by 10–15% |
| Reduction of transportation costs |
by 9–14% |
Cost reduction on logistics management
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by 20–40% |
| Reduction of total costs related to KiTRS |
by 10–12% |
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