This document provides an overview of Shell Pakistan Ltd's supply chain operations. It discusses Shell's history in Pakistan dating back to 1903. It then outlines Shell's strategic intentions, vision, goals and strategies. It provides details on Shell's local and foreign suppliers, products, types of oil streams, modes of oil supply to terminals, major consumers, and the complexities of the oil supply chain process. It also maps out Shell's upstream and downstream operations including exploration, production, procurement, refining, distribution and marketing. Finally, it discusses topics like terminal locations, demand planning, transportation, ports, inventory management and channel offer management.
To Madam Ayesha...Financial Analysis of PSOSam Royale
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To Madam Ayesha...Financial Analysis of PSOSam Royale
This is the financial analysis with all financial ratios calculated. I feel very sorry to say that my project was considered copy paste.Although it was a damn 1 day work out.
Buy Indian Oil Corporation for a target of Rs405IndiaNotes.com
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I am student of MBA (Supply chain management) at Bahria University Pakistan. I and my friend made this report on the supply chain management of Shell Oil. Kindly like and if anyone want this report than kindly email me on usama.geo@hotmail.com.
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Buy Indian Oil Corporation for a target of Rs405IndiaNotes.com
During FY14, Indian Oil Corporation (IOC) witnessed 59% YoY rise in net profit to `70.9 bn on account of budgetary support of `371.8 bn in FY14 and a discount of `346.7 bn. The improvement in refining margins could create value for shareholders, going forward.
I am student of MBA (Supply chain management) at Bahria University Pakistan. I and my friend made this report on the supply chain management of Shell Oil. Kindly like and if anyone want this report than kindly email me on usama.geo@hotmail.com.
Regards,
Osama Bin Raees
Attock petroleum limited is a subsidiary of the Attock group of Companies
popularly known as Attock Group, which is a combination of multinational
group of Pakistan. APL, was incorporated in Pakistan as a public limited
company on December 3, 1995, sponsored in conjunction by Pharaon
Investment Group Limited Holding (PIGL) and Attock Oil Group of
Companies (AOC) and is one of the four Licensed oil marketing companies of
Pakistan in February, 1998. It is the only fully integrated group in the oil and
gas sector of Pakistan involved in exploration and production, refining and
marketing and its portfolio consists of lubricants, commercial and industrial
fuels.
APL has a large storage capacity 35,950 metric tons, transportation, and is
growing heir network of modern gas stations targeting specially to remote areas
of Pakistan like Khyber Pukhtunkwa & Punjab. APL has over 600 retail outlets
across Pakistan.
In the fuel category, APL markets and supplies fuels to manufacturing industry,
armed forces, power producers, government/semi-government entities, FMCG
companies, developmental sector, agricultural customers etc.
Other subsidiaries of this group includes
Pakistan Oilfields Limited (POL)
Attock Refinery Limited (ARL)
National Refinery Limited, Karachi (NRL)
Attock Petroleum Limited (APL)
Attock Cement Pakistan Limited (ACPL)
Attock Information Technology Services (Private) Limited
Attock Gen Limited
APL’s main product is lubricants, oil and gas and is engaged in the production
and refining, oil exploration, manufacturing of petroleum products and in
selected retail outlets also provide CNG as well as non-fuel retailing options
such as tuck shops, car services and lubricants.APL has plants in Attock
District – Khaur,Rawalpindi District – Morgah,Dhulian Gujrat Punjab,Meyal
and Toot.
APL supplies a range of petroleum products in Pakistan. It offers various
petroleum products, such as Liquefied Petroleum Gas (LPG)
Petroleum Solvent Grade , Naphtha, Unleaded Premium Motor Gasoline
(PMG),Mineral Turpentine (MTT),JP-1,JP- 8,Kerosene Oil, High Speed Diesel
(HSD),Light Diesel Oil (LDO),Jute Batching Oil (JBO),Furnace Fuel Oil
(FFO),Low Sulfur Fuel Oil (LSFO),Residual Furnace Oil (RFO),Paving Grade
Asphalt,Cut Back Asphalts, Polymer Modified Bitumen (PMB)
This project is an outcome of 4 weeks of vocational industrial training, which I have to undergo for the partial fulfillment of the Bachelor of technology (Chemical Engineering). I have completed this training at IOCL, Brauni (Bihar), India's second oldest crude oil refinery.
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4. Contents
HISTORY.............................................................................................................................................2
STRATEGIC INTENTION........................................................................................................................2
NUMBER OF DEPOTS IN PAKISTAN.......................................................................................................3
SUPPLY CHAIN PROCESS OF OIL INDUSTRY:..........................................................................................4
SHELL SUPPLY CHAIN PROCESS OF SHELL PAKISTAN:.............................................................................4
Local Suppliers................................................................................................................................5
Foreign Suppliers............................................................................................................................5
SHELL PRODUCTS................................................................................................................................5
TYPES OF STREAMs in an OIL INDUSTRY...............................................................................................5
Mode of Oil Supply to the shell terminals.............................................................................................7
Major Consumers...............................................................................................................................8
Shell Complex Supply Chain.................................................................................................................8
Upstream Operations......................................................................................................................9
Shell Downstream Operations .......................................................................................................10
Terminal locations:...........................................................................................................................12
Demand planning:............................................................................................................................12
Inside the company.......................................................................................................................13
Transportation .................................................................................................................................13
Ports................................................................................................................................................13
HIERARCHY OF SHELL’s SUPPLY CHAIN...............................................................................................14
Inventory management:....................................................................................................................15
Channel offer management:..............................................................................................................15
5. HISTORY
Shell isa multinational companyandinPakistanitisoperatingasa publiclimitedcompanybythe name
“Shell PakistanLtd.Shell isa superiorbrandname witha100 yearhistoryinthisregion,infectthe
companyisstill inpossessionof afuel storage tankfrom1899. However,the documentedhistoryof the
Royal Dutch/shell groupthe Indo-Paksubcontinentdatesbackto1903 whena partnershipwasstruck
betweenthe shell transportandtradingcompanyandthe Royal Dutch petroleumcompanytosupply
petroleumproductsinAsia.
STRATEGIC INTENTION
COMPANY’S SLOGAN/MISSION
“You can be sure of Shell.”
COMPANY’S OBJECTIVE
Shell isfocusingonretailing,providingbetterfacilitiestocustomers,cleanpetrolpumpsconstructing
international standardpetrolfillingstations,goodadvertisingcampaignsandmini markets(select).
VISION OF SHELL
To Be The Top PerformerOf FirstChoice.
AIM OF SHELL
Creatinga secure businessenvironment,minimizingeconomiclosses,andbusinessdisruptions
safeguardingthe group’sintegrityandreputations.
GOAL OF SHELL
The goal of the companyisto positionitself asthe preferredoil companyinPakistan,leadingthe fieldin
itscommitmenttosafety,customerservice,qualityandenvironmental protection.
6. STRATEGIES OF SHELL
A strategyof corporationformsa comprehensivemasterplanstatinghow the corporationwill achieve
itsmissionandobjectives.Itmaximizescompetitiveadvantage andminimizescompetitive disadvantage.
The strategyof Shell istogrow internallybyexpandingitsoperationsthroughacquisitionandstrategic
alliances.
Shell focusestodifferentiateitsproductsfromcompetitorsinthe areaof qualityandservices.
ORGANIZATIONALRESOURCES
Shell hasestablished1404 petrol filingstationindifferentareasof Pakistan.Butnow the companyis
tryingto reduce the numberof petrol fillingstationbecausetheydonotneedthat fillingstation,whose
monthlysalesare lessthan500000 liters.Up till now about50 pumpsare renovatedindeferentcitiesof
Pakistan.
MARKET LEADERSHIP DUE TO INNOVATION
Shell isconsideredtobe the marketleaderininnovation.Itwasthe firstcompanytoget legal approval
to operate Mini-Market.Itprovidessuggestive literaturestoitscustomerswhilelaunchinganew
productsuch as Helix superandHelix Lubricantetc.
It was alsothe firstcompanyto introduce the conceptof Mobile TrainingUnit (MTU) for the purpose of
trainingthe workersandintroducingqualityandquantitycontrol units,whichcheckthe qualityand
quantityof motorgasoline atvariousfillingstations.
NUMBER OF DEPOTS IN PAKISTAN
Shell hasgot14 depotsindifferentareas of Pakistan.
Oil and petroleumindustrysupplychainistotallydifferentthanthe supplychainof FMCG insteadof
lubricant.Shell Pakistanoroil marketingcompaniesfollowsdownstreamsupplychain.
7. Shell purchasesproductsfromthe followingrefineries:
Local Suppliers:
National Refineryltd
Pakistan refineryltd
Byco Refinery
Attock Refinery
PARCO Refinery
Foreign Suppliers:
Shell importsrefine oil fromall overthe worldbutmostlyfromGulf andFar East.
Oman Refinery
Qatar Refinery
Singapore Petroleum
Malaysia Petroleum
Kuwait Petroleum
ADNOC
SHELL PRODUCTS
Motor Gasoline (MOGAS)
HighSpeedDiesel (HSD)
JetFuel
Furnace Oil
AviationGasoline(AVGAS)
Shell purchases these products fromthe refineriesone mostprofitable productof shell isAviation oil.
Thisoil isnot available inPakistansoShell isimporting thesegases tosupplytothe Militaryfortheir
aircrafts. Refineriesgive producttothe companyby the pipe lines.
TYPES OF STREAMs inan OILINDUSTRY
The oil &gasindustry is usually divided into three major
sectors: upstream, midstream and downstream
The upstream oil sector isalsocommonlyknownasthe exploration and production (E&P) sector.The
upstreamsectorincludesthe searchingforpotential undergroundorunderwater crude oil andnatural
gas fields,drillingof exploratorywells,andsubsequentlydrillingandoperatingthe wellsthatrecover
and bringthe crude oil and/or raw natural gas to the surface.
The downstream sector commonlyreferstothe refiningof petroleumcrude oil andtheprocessingand
purifyingof rawnatural gas, as well asthe marketinganddistributionof productsderivedfromcrude
8. oil and natural gas.The downstreamsectortouchesconsumersthroughproductssuchas gasoline or
petrol,kerosene,jetfuel,diesel oil,heatingoil,fueloils,lubricants,waxes,asphalt,natural gas,
and liquefied petroleumgas(LPG) aswell ashundredsofpetrochemicals.
The midstream sector involvesthe transportation(by pipeline,rail,barge, ortruck),storage,and
wholesalemarketingof crude orrefinedpetroleumproducts.Pipelinesandothertransportsystemscan
be usedto move crude oil fromproductionsitesto refineries anddeliverthe variousrefinedproductsto
downstreamdistributors.
Upstream
Exploration & Production
Midstream Downstream
Refining & Marketing
Pakistan Oilfields
Limited
Orient Petroleum Inc.
OMV Pakistan Inc.
Pakistan Petroleum
Limited (PPL)
Shell Pakistan Ltd.
Caltex Oil (Pakistan)
Limited
Pakistan State Oil
Company Limited
Pak Arab Refinery Complex
National Refinery Limited
Pakistan Refinery Limited
9. Mode ofOil Supply to the shell terminals
Tank Trucks
Tank Wagons (Pakistan Railway)
Pipelines.
SPL has a 26% share inthe in the White Oil pipeline operatedbyPak-ArabPipeline Company
(PAPCO),whichrunsfromKarachi toMehmoodKot.Shell hasa30% stake inPakistan Refinery
Limited(PRL) inKarachi.
10. Major Consumers
- Retail Customer: petrol pumps (also called dealers)
- Commercial customer: big industries (textiles etc)
- Big power plants
- Aviation customers
Shell Pakistan Limited (SPL) in numbers:
Shell has got 14 depots in different areas of Pakistan.SPL serves approximately 1,000,000
customers at its Retail stations in Pakistan
We have over 750 Retail stations across the country
Offering over 15 lubricants for different vehicles and industrial uses
A Shell fleet of over 300 oil tankers distributes our products nationwide
60 aircrafts served daily
Shell has a 39% brand share preference
SPL distributes from 8 oil depots (including JVs)
Shell is present at 5 major airfields across Pakistan
Shell Complex Supply Chain
The whole supplychaininthisindustryasverycomplex comparedtootherindustries.The crude oil has
to make a longjourneyfromthe pointof productionto the refineries.Longdistance resultsinalong
leadtime of several weeksandinnumerousplayersinthe supplychain.The productionisconcentrated
incertainareas but the productitself isdemandedall overthe world.The refineryprocessisacomplex
and capital-intensivepartof the chain.The refinedproductsare distributedeitherbyroad,water,rail or
pipeline.
The oil supplychainisfundamentallybasedonatraditional model andthe differentstagesinthe chain
alsoillustrate it.The oil companieshave theirclassicwaytoserve the customerswithproductsbeing
'manufactured',marketed,soldanddistributed.The maingoalsare the same like inotherindustries,
deliverthe rightproducttothe usersin the righttime and at the rightprice.The oil supplychain
essentiallycanbe dividedintotwocloselylinkedmajorsegments:upstreamanddownstreamsupply
chain.The supplychainasa whole consistsof 6 mainstageswhere the middle refiningstage separates
the up- and downstreampartsof the chain,althoughprocurementasavital functionhasto happen
before refinerystage inordertoprovide the inputsforit.Figure illustratesthe beforementionedand
givesa schematicviewaboutthe typical oil supplychain.
11. Upstream Operations:
Upstreamof Shell Petroleumbasicallystartswiththe acquisition of crude oil andwiththe related
operationsuchas explorationandproduction.Afterwardlogisticsmanagementhastobe involvedin
orderto deliverthe crude oil fromthe exploitationpointtothe refinery.
1. Exploration:
Thisstage involvesseismicand geological operations.
2. Production:
These concernsaboutexploitationof the crude oil fromthereservoirbydrilling.Production
needshighlyqualifiedengineeringworkanditalsolinkstoother activitiessuchasprocurement,
transportation.The crude oil producedistransportedbypipelinesoroil tankerstothe terminals
for storage.Fromhere itis eithertotransportdirectlytothe refineryorexportedtoother
companies’refineries.
12. Shell Downstream Operations:
The firststage of the downstreamsupplychainisthe refiningprocesswhichisbasedondemand
forecastingandtriggersthe procurementandthe logisticsactivitiesinordertosupplycrude oil tothe
refineryanddeliveritsderivativestothe customers.
3. Procurement:
Thisis sourcingof and managingthe supply of the rawmaterial to the refinery in the right time
and in the right quantity.
13. 4. Refining:
Thisis a complex,well planned process which involves thetransformation of the crude oil into
differenttypesof derivativesbasedondemandforecasting.Therefore,thishasatightlinkto the
next stage, to the marketing activities and also involves inventory management.
5. Distribution:
Logisticsmanagementassuresthatthe rightproductsgetdeliveredtothe right customersinthe
righttime preferablyinacost efficientway
14. .
6. Marketing:
Thisdealswithmarketingthe differentcrude oil derivativestothe rightcustomers.Marketing
has to have an accurate knowledgeaboutthe currentinventorylevel andrefineryactivitiesin
orderto manage its sale function.
Terminal locations
Kemarri in Karachi , Shikarpur,MehmoodKothin Balochistan,inLahore atMachike,InIslamabadat
chaklala,inPeshawaratTaruChamba. Kemarri terminal isthe onlyplace inPakistanwhere Shell cantake
deliveryof Oil/productsdirectlythroughShiptankertransports.
Demand planning
Outside the company(overall for the whole of Pakistan):
Oil industryisa regulatedindustry,Companiescannotdecidethemselveshow muchOil toimportor
produce,thatis setby Ministryof Petroleum.The ministrywill advisethe Oil marketingcompaniesto
maintainstockso thatthere is noshortage inthe market.Oil marketingcompanieswill trytosource the
Oil throughrefineriesorif thatis notpossible thenthroughimports.Ministryof commerce holdsa
meetingeverymonthknown as“productreview meeting”.Here all marketingcompaniesand
representativesfromthe refineriescome andreview the productioncapacitiesof differentrefineriesfor
differentproducts;Combineddemandof all the oil marketingcompaniesisputforwardandthe shortfall
has to be imported.
15. Inside the company:
Whenthe monthends,the retail teamand the marketingteamtell the demandforthe nextmonth.
if for example we knowaboutnextmonth’sdemandinIslamabad,thenthe demandplannerwillcheck
and see howmuchof thisdemandcan be metby Attockrefinery.If there isashort fall,thenthe
demandplannerwill checkandsee howmuchof the product isavailable inFaisalabad,isPARCO
Refineryable tomeetthe demand? If sothenproductwill be purchasedfromPARCOloadedontoTank
Lorriesand sentto Islamabad.If thatisnot the case thenthe plannerwill looktowardsKemarri,where
the product isalwaysingreaterquantity.Productswill be shippedfromKemarri overlandviatanker
transportor pipelinesincase Diesel product.
Transportation
4 modesof transportation:
Land
Air
Sea
Pipeline
Amongall, Pipeline is consideredtobe the cheapestmode of transportation.
Ports
There are 2 ports inPakistan that are utilizedbyShell PakistanLtd.:
KPT
Port Qasim
“Wide oil pipeline”goesall the waytoLahore.It isusedto transportDiesel fromthe southernpartof
PakistantoNorthernandmid countryparts of Pakistan.Due to thispipeline the carrying/transportcost
for the customerbecomesvery low.The pipeline canbe usedbyall the oil marketingcompanies.Ship
tankertransportscarrying Diesel usuallycome toPortQasim. Terminalsof Shell atMehmoodkothand
machike are connectedtothispipelineandfortransportationof Diesel Shell doesnothave touse over
landTankertransport as itis usingthispipeline.Astransportcostis low,automaticallythe costtoend
consumerisalsolow.
16. Q:Whyis price of fuel constantthroughoutPakistaneven thoughcost oftransportingto consumers
and customersin northern areas ofPakistanis expensivethen southernareas?
Governmenthassubsidizedthe costof transportationtonorthernareas.Costof transportingproducts
to Lahore is expensive byRs5/litercomparedtotransportingtosouthernareas.Technicallyspeaking
cost of fuel shouldbe more expensiveinLahore comparedtosouthernareas.The governmenthas
askedall the oil marketingcompaniesnottopasson thisprice to the customer,inreturnthat cost is
compensatedbythe government.
HIERARCHY OF SHELL’s SUPPLY CHAIN
GM Supply&
Distribution (4
countries)
Facilities
Terminal
Manager
Logistics
Manager (ME& SA)
South North
Supply Contracts
& Negotiations
Supply Contracts &
Negotiations Lead
Supply Chain
Analyst
Supply
Operations (ME &
SA)
Supply
Operations
Lead (PK)
Supply
Operations
Analyst
17. Inventory management
G-SAP(Global SAP)isusedtomanage inventory.Asperthe instructionof the government,Oilmarketing
companieshave tomanage an inventoryof 20 to 21 days incase of Diesel andMotor Gasoline.Supply
teamleadisresponsible forall the demandplanningandsupplyplanning.Since Oil marketing
companies’role istodistribute Oil productstocustomers,nointernal demandplanningcantake place
insteadChannel offermanagementisdone.
Channel offer management
Salesandoperationplanning:Channel offermanager,supplieroperationsleader,logisticsmanagerare
the primaryparticipants.If foran example there isademandfor80 millionlitersfornextmonth,it isthe
jobof supplyoperationsleaderto ensure that80 millionlitersisavailable.Logisticsmanagerhasto
ensure thathe has enoughtanklorries/tankertransporttoshipthe Oil productsto customers.Channel
offermanagerprovidesthe demandfigures(fromthe ordersreceived).Itisthe supplythathas to be
planned,notthe demand.