P a g e  |  0    

 

The  basic  knowledge  for  begins  a  business  in  oil  &  Gas,  as  a  Mandate  seller.          

2015  

CraydonGroup  12/1/2015

P a g e  |  1  

 

CraydonGroup  |   Internal  Training  courses  

 

I. The basics of the Oil&Gas Consultancy Field

II. Differences: UpStream and DownStream

III. Upstream

IV. Downstream

V. Different Refined Product made from Crude Oil

VI. Prices vary in function of the marketscan known as platts

VII. Units for quantity measure

VIII. Introduction

IX. Major Procedure

X. Reseller procedure

XI. After internal sales procedures(necessary before sharing informations)

XII. Presentation & sending of the procedures

XIII. The usual procedure in oil and gas

XIV. (Buyer Side) sends L.O.I. : Letter of Intent

XV. (Seller Side) sends S.C.O. (Soft Corporate Offer) (DHL, Email) :

XVI. (Buyer side) (Provides ICPO).

XVII. (Buyer Side) reverts with signed FCO

XVIII. (Seller Side) Sends the Draft contract signed or a signed Draft SPA

(Sales and Purchase Agreement)

XIX. (Seller side) Proposes a TTM

XX. Product Procedure for LNG

XXI. Protocolar Sales Procedure

XXII. Introduction

XXIII. Post Procedure Protocol

XXIV. Retour d’expérience

XXV. Oral Practice

XXVI. Purpose of the exercise

XXVII. Required Oral Skills

XXVIII. Mistakes to avoid

P a g e  |  2  

 

CraydonGroup  |   Internal  Training  courses  

 

 

i. Differences: UpStream and DownStream

 

UpStream : Extraction of Petroleum, every aspect of the extraction of Petroleum, called Crude Oil => « heavy or light ». (Also known as Bonny Light)

UpStream Equipments : (drilling, platforms, Offshore (on sea), On shore (on land) and others constituting the extraction environment for Crude Oil).

Downstream : Concerning Refined Petroleum Products :

Sample Product Refining Scheme : Reception of Crude Oil => Crude Oil boil-up=>

resulting Trough different types of Distillation = refined products such as D2, JP54, Mazut

100- Mazut 75 – LNG.

(See number 1- On the road to the Business of Oil Page 17)

Precision 1 :

- their distillation method (Atmospheric / Vacuum / Hydro treatment)

- temperature (fusion point –boiling point)

Precision 2 : The quality of Crude Oil can be define in function of its viscosity (or API % ). He could be Heavy or Light . The Quality of D2 is Defined in function of the percentage of Sulfur it contains, Ex : D2 = 0.2 % sulfur / 0.25, 0.0002, 1% // Depending on the levels of sulfur we obtain different qualities/types of Diesel. P.S. : The quality of each refined product is defined by the rate of a specific chemical element it contains.

Product Example (See P: 13 (When it comes into product)

P a g e  |  3  

 

CraydonGroup  |   Internal  Training  courses  

 

 

Everyday the market reacts to the price of the Barrels, Crude Oil or Refined. Prices are not available to all since only registered enterprises can have access to those.

 

We measure D2 and Mazut 100 / 75 in Metric Tons => M/T We measure JP54, Crude-Oil and LNG in bbls (barrels) or in gallon,

Precision 1 : So we have 4 principal measure units when it comes to products in the liquid state: the Metric Ton, the gallon, the barrel and the cubic feet.

=> 1 MT = 7.6 barrels (on average)

=> 1 barrel = 159 L = 42 gallons (American unit)

That varies depending on the density of the product.

Precision 2 : Production is measured in barrel(s) per day or ton(s) per year- one barrel per day corresponds to 50 Metric Ton a year.

P a g e  |  4  

 

CraydonGroup  |   Internal  Training  courses  

 

We are in a market where the most important part is to find and have a seller/supplier. There are numerous buyers and sellers, they all have different procedures, that vary according to their sizes, their title , their goodwill, or their preferences.

SELLERS MARKET = a market where the sellers decide on the procedures, since they have the right to. Always Remember , there is only an example , procedure are several and can change or be modify , nothing is fix in Oil & Gas , there is not One Procedure Miracle , Overwise we will use it since a long . It is possible to encounter the following procedures:

For majors (Shell, Gazprom, Lukoil, Total, Petrobras there are no L.O.I./ICPO..

The procedures usually start with DRAFT, Following shipment.

The airlines company as: American Airlines, Emirates Airlines, Lufthansa, when they buy through a Reseller with the preferred procedure:

CI => DIP TEST USUALLY CALL = DIP AND PAY. When we say Commercial Invoice Dip Test, we know that this is a dip and pay.

a) Dip and Pay:

Is a procedure to buy the refinements products in Fast Way (72 hours max As usual.

- Dip is the fact that one Dip Test Product / is Usually an agent of the SGS

(Safety Organization of quality control of the product) will move to monitor the quality of the specified product.

- Pay: This means that the customer pays their product directly after the SGS

produce the result of their test to verify if the product is conform to the specs given . This is the procedure called contract: SPOT CONTRACT.

P a g e  |  5  

 

CraydonGroup  |   Internal  Training  courses  

 

Buying from a refinery (according/depending on the refinery procedure), Government companies which deal with the majors (usual market) are used to buy with their procedures. When buying product it is the seller who imposes his procedure, not the buyer, however, when facing a Major, it often imposes its procedure whether buying or selling. So we Will always try to facilitate the deal by agreeing to have their procedure and then presenting them to the refinery for acceptance or rejection.

- Stay firm on your procedure - Stay calm and do not be daunted by the inconveniences. - Be sure you have the product.

1) Read any document submitted 2) Check all documents before sending them 3) Speak very little email 4) => 3 things that can determine if you are someone serious or broker.

5) => Respecting our professionalism and stay cold-blooded (no emotional attach)

P a g e  |  6  

 

CraydonGroup  |   Internal  Training  courses  

 

 

v (BUYER SIDE) SENDS L.O.I. : LETTER OF INTENT

Informations about the Buyer sidemust be present. AS On an official letter incorporating:

1) Official Company Letterhead 2) Signature Of The Of the Power authority Person mentioned in the LOI. 3) Updated dates 4) Complete information about the Company (can be annexed with a Company

Profile) 5) Buyers, mandate, or Official contact person business card Information

v (SELLER SIDE) SENDS S.C.O. (SOFT CORPORATE OFFER) (DHL, EMAIL) :

1) Product references 2) Product origin, 3) Spec sheet, 4) Price information

v (BUYER SIDE) (PROVIDES ICPO).

To show his acceptance of the SCO, the Buyer shipments a ICPO (Irrevocable Corporate Purchase Order) (Confidential) (Safe Email or DHL): + Ability to add NCNDA or not. Importance of such information: customer passport, product passport

(Seller Side) (After receipt of the ICPO) Seller sends FCO (Full Corporate Offer).

v (BUYER SIDE) REVERTS WITH SIGNED FCO

Reverts with FCO signed + Possibility to add NCNDA or not.

v (SELLER SIDE) SENDS THE DRAFT CONTRACT SIGNED OR A SIGNED DRAFT SPA (SALES AND PURCHASE AGREEMENT)

Obligation to attach and present NCNDA - IMFPA (Safe Email / DHL / EREGEX / TTM). The buyer side has the ability or not to seek or impose changes on the contract from

that time, because of the amendments, because of official letters annexed to the Draft or by direct changes in the Draft.

P a g e  |  7  

 

CraydonGroup  |   Internal  Training  courses  

 

(Buyer Side) Reverts with signed SPA/DRAFT CONTRACT Then both parties start following Bankig procedure and shipment procedure.

v (SELLER SIDE) PROPOSES A TTM

To finalise all the documents and trial shipment.

Specifically for LNG: special terminal, and special vessel. Usually long term contract, usually 20 years.

Possible Procedures for LNG : ● SPOT => direct purchase ● Refined Product : DIP Test => direct purchase

 

 

   

Craydon Group

BinThani Avenue, M4

Near Emirates Aviation College