Free Assingment on Procurement & Contracts

Procurement & Contracts

EXECUTIVE SUMMARY
This report provides of brief summary of category management in procurement and
supply chain management in oil and gas industry. It is planned to proposed all the activities
which is conducted by company with the single aim of reducing overall production cost to a
certain level so that more profit margin would be earn by them as compare to other competitors.
Various potential risks which is faced by upstream company while operating their
operations and mitigating strategies for it is explained and determine. Different practical
examples which could be adopt by company to improve their productivity and efficiency is also
given. Like risk management will help company to identify the risk they are going to face in
future and how it could be removed so that company won’t get affected from it in negative way.
Moreover, it also company to identify the opportunity in the market and how it could be adopted
without wasting time and money.

Contents
EXECUTIVE SUMMARY.............................................................................................................2
Contents...........................................................................................................................................3
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Overview of company............................................................................................................4
Risk management plan...........................................................................................................5
Supply chain of oil and gas industry......................................................................................7
Kraljic Portfolio Purchasing Model........................................................................................7
Porters five forces model (because upstream is more closer to natural environment)...........8
Recommendations..................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
APPENDIX....................................................................................................................................15

INTRODUCTION
Procurement category refers to a process of groupings all the materials which are similar in
nature, have same suppliers, demand drivers etc. Category management is a step by step and
strategic approach of accumulating those resources which are similar to each other and then
procuring it to reduce excess procurement cost. Main objective behind category management is
to focus on specific areas for conducting market analysis so that uncertain circumstances or
obstacle would be removed in the first place. Besides this, supply chain role in oil and gas
industry to transport the raw material or machinery on time so that proper utilisation of resources
would be attain.
For this report, Dragon oil holdings is taken for consideration which conducts their
business in private upstream oil and gas organisations in UAE. Company was founded in 1971
and headquarter in Dubai. This report will throw some light on different strategies of
procurement and how it could affect company performance in a positive or negative way. Risk
management model will be explained by taking functional example of Dragon oil holdings.
Aspects which affects upstream oil and gas industry is determine by considering porter five
forces model. At last, various recommendations is given to company so that they would be able
to sustain their market position.
MAIN BODY
Overview of company
Dragon oil was registered in Irish stock exchange and after that it was acquired by oil giant
Emirates National Oil Company (Murphy and et al., 2017). Company was launched by Dr Oliver
Conor Waldron in 1971 but changes their name to dragon oil in 1993 and starts working in
Cheleken region. But external environment has affected their performance in the mid 90’s due to
late delivery of product resulting in millions of losses for the owner and stakeholders. To cope up
with the environment, company sells their shares to Emirates national oil company and in 2015,
sell the remaining 46 per cent shares in exchange of approximately 3.7 billion Euro. Company
has been running their operations in various places like Cairo, Egypt, Algiers etc. Firm has the
ability of extracting 100,000 barrels per day which gives them competitive advantage over other
competitors (Rentizelas and et al., 2018).