Logistics and Operation in Oil and Gas Industry: A BP Analysis

This report provides a comprehensive analysis of the logistics and operations of British Petroleum (BP), a major player in the oil and gas industry. It begins with an introduction to the industry, highlighting its importance and structure, and then focuses on BP's mission, vision, and operational areas. The report delves into the challenges and opportunities BP faces, including the impact of growing energy demands, global economic changes, and environmental concerns. It explores key operational aspects such as planning and control, inventory and capacity management, project management, and health, safety, and quality management. The analysis further outlines BP's target market, including car rental and aviation industries, and examines the company's configuration and supply chain management. The report also addresses transportation modes and coordination within the supply chain, providing recommendations for improvements. Overall, the report offers valuable insights into the complexities of managing logistics and operations within a leading oil and gas company.

Running head: LOGISTIC AND OPERATION OIL AND GAS
Logistic and Operation Oil and Gas
Name of the University:
Name of the Student:
Author Note:

1LOGISTIC AND OPERATION OIL AND GAS
Table of Contents
1. Introduction........................................................................................................................2
2. Discussion..............................................................................................................................3
2.1. Question 1.......................................................................................................................3
Challenges and Opportunities............................................................................................3
Planning and Control..........................................................................................................4
Inventory and Capacity Management................................................................................4
Project Management...........................................................................................................5
Health, Safety and Quality Management...........................................................................5
2.2. Question 2.......................................................................................................................5
Outlining target market......................................................................................................5
2.3. Question 3.......................................................................................................................8
Outlining impact of products and equipment.....................................................................8
3. Conclusion and Recommendation..........................................................................................9
4. References............................................................................................................................10

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Executive Summary
The report deals with the oil and gas industry, which is one of the leading sectors of the
world. British Petroleum, often abbreviated as BP, is taken as an example in order to
understand the operations of oil and gas industry. In addition to this, the report discusses
about the planning and control, inventory and capacity management, health and safety and
other factors in detail. The company helps in contributing a lot to the country’s Gross
Domestic Product. Moreover, the company also operates in various areas including
production and exploration, marketing and distribution, refining, trading, petrochemicals and
power generation. Lastly, the report provides some recommendations based on the
discussions made and how their problems with the logistics can be resolved.

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1. Introduction
The oil and gas industry is one of the leading sectors of the world, in terms of dollar
value. It is highly regarded as the global powerhouse, which employs hundred thousands of
the workers, all around the world. At the same time, it contributes a lot to the country’s
economy by generating billions of dollars every year. The regions which house the major
National Oil Companies contribute a significant amount to the country’s Gross Domestic
Product (Jacobs, Chase and Lummus 2014). This particular industry is however, broken into
three major segments, which are Upstream, midstream and downstream. The first component
that is the Upstream is referred to exploration. This generally involves the need to search for
underwater and underground natural oil and gas fields (Tako and Robinson 2012).
The organization chosen is British Petroleum, which is often abbreviated as BP and
the report discusses about the mission, vision and goals of the company. The British
Petroleum is a multinational oil and gas company which is headquartered at London,
England. The vision and mission of the company is to be one of the world’s leading
organizations, on the basis of market capitalization and revenue generation (Bp.com. 2018). It
wants to widely recognized and successful on the competitive landscape. The company owns
thirteen refineries which supplies commercial and retail customers. Moreover, British
Petroleum is a vertically integrated company which operates in various areas including
production and exploration, marketing and distribution, refining, trading, petrochemicals and
power generation (Coyle et al. 2016). In addition to this, the report will provide some
recommendations in relation to the identified issues and to ensure consistency.

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2. Discussion
2.1. Question 1
Challenges and Opportunities
British Petroleum is a reputed organization and the world’s largest oil and gas
company, which is meeting the growing demand in a responsible and safe manner. However,
the oil firm is best suited for oil operations and not best suited for gas operations. Therefore,
the company is planning to expand their operations in the oil segment. On expanding the
business the company will be facing some challenges in relation with logistics and
operations. The major challenges are discussed in this segment of the assignment. Firstly, the
ever growing population of the world and their demands is leading bringing in a change in the
overall oil and gas companies (Dyckhoff, Lackes and Reese 2013).
Secondly, the growth of global economy is also leading to a great change for the
overall success of the company. Thirdly, the energy consumption is growing and in the last
two decades the energy demand grew around fifty percent. Moreover, it is expected to grow
around forty percent in the next two decades (Van Wassenhove and Pedraza Martinez 2012).
Therefore, it can be consider as a technical slowdown, which can prove to be a major
challenge in terms of energy demand. Fourthly, the big challenge is that it will add to the
global concerns regarding carbon, which will affect the oil and gas industry. The tensions and
conflicts affecting the oil and gas producing industries will also pose to be a great threat for
the company itself (Bosona and Gebresenbet 2013).
In addition to this, lack of competencies within the organizations can be a major
challenge, which is associated with outsourcing. Therefore, appropriate solutions must be
taken in order to discover new oil as well as gas resources. In modern days, companies can
certainly call upon the advanced seismic data which will enable them to determine the places

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better for drilling and getting best results (Monczka et al. 2015). Moreover, instrumentation
should be installed for continuously monitoring the progress and wellbore in order to steer
along the most beneficiary path throughout the reservoir.
Planning and Control
Successful businesses often require efficient and effective planning and control over
the management operations. The operations control or planning typically occurs in the
manufacturing environment. Therefore, while expanding their operations, British Petroleum
should consider planning and controlling the operational steps beforehand, to mitigate the
challenges (Tayur, Ganeshan and Magazine 2012). The production planning however focuses
on the steps like production management, operational plans and others, in order to expand the
business successfully.
Inventory and Capacity Management
Inventory and capacity management is considered to be immensely important for the
companies which are able to cope up with random interruptions related to supply as well as
demand. It will help the company to cope up with the operations and enable the industry to
produce products and services simultaneously. Inventory at times, takes up storage and space
and therefore, the managers need to take business decisions in an effective manner. British
Petroleum has worked very hard over the past years in order to improve their inventory
management. It will help in reducing the lead times in getting the critical spare parts and
reduce waste from the storage and purchase of excessive materials. In addition to this, the
company has launched innovative projects and measures for improving its management
further (Estampe et al. 2013).

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Project Management
Project Management will enable the organization to deliver large scale projects, which
in turn will improve the organization’s supply chain management and logistics system. The
ongoing organizational functions will also help the company to produce or supply products or
services. For example; the production operations, Information Technology, manufacturing,
service management as well as accounting operations (Tayur, Ganeshan and Magazine 2012).
Health, Safety and Quality Management
British Petroleum should ensure that their products and services are ahead of their
competitors at the marketplace, in terms of health, safety and quality. This is the key to their
overall growth and by maintaining as well as improving the quality the company will be able
to bring in continuous change within the organization. This should also cover the areas
related to increased productivity, maximum output, quality control and also consumer
satisfaction (Van Wassenhove and Pedraza Martinez 2012).
2.2. Question 2
Outlining target market
The target market for British Petroleum can be the people that are involved in the car
rental services or the aviation industry. The target market consists of people that own cars and
try to maintain the sustainability of the environment. For this reason, it is necessary that the
company provide a product such as natural gas, aviation fuels and motor fuels to the target
market that requires its use on the field in which they work (Schwalbe 2015). The challenge
that may be faced in the planning and controlling of the logistics includes identifying the
required transportation for extracting oil and carrying it back to the main source. The
challenge, however, is the lack of skilled employees that possess the experience to monitor as
well plan the development of logistics.

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Configuration
In this regard, it can be said that British Petroleum aims to continue with the
manufacturing and selling of petroleum by itself. According to Christopher (2016), this is
mainly because of the fact that the company is reputed all over the world and in the modern
days, vehicles are used heavily for travelling to one place to another. The private cars and
public cars requite excess petroleum and it is necessary that British Petroleum live up to its
name and continue to be the main manufacturer of the product. The product that the company
can outsource is the petrochemicals (Mangan, Lalwani and Lalwani 2016). This is because
petrochemicals can be used for conducting scientific research that is done all over the world.
Petrochemicals can be used in space stations such as NASA and thus, British Petroleum can
outsource this product (Bp.com 2018).
According to Prajogo, Oke and Olhager (2016), supply chain management requires
proper equipment and transportation facility. The target market for British Petroleum includes
the people owning cars and people from the aviation industry. The first tier clients of the
company are the people that own private cars. The private car owners require petrol and
motor fuels to maintain the cars for a long run. Organisations need to keep in mind the
inventory so that excess amount of products are not manufactured or purchased. The capacity
of an organization can be determined from the available resources it has and the space
required for managing the resources. The challenge in maintaining proper inventory is that
the managers need to maintain records of the number of products they have in the
organization.
In the case of British Petroleum, the challenge includes the excess storage capacity of
the organization. It becomes problematic for the organization to manage the inventory and
keep in mind the capacity it has in storing the product. In the modern world, project

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management is considered as a challenge due to excess time required. Normally the extension
in the length of a project is due to lack of employees or lack of materials. In the case of
British Petroleum, the concern for the organization in managing project is the fact that
projects undertaken can cover long grounds. Thus, the lack of experienced and skilled
employees along with improper planning can lead the company to fail in the management of
the projects.
Hence, the suppliers of the company need to be the people that provide proper
equipment to extract the petrol and fuels from the grounds. In the words of Stadtler (2015),
the equipment for this purpose needs to be supplied by organizations that manufacture the
equipment. Thereby, the suppliers of the company are the equipment manufacturer that
develops high tech equipment for the extraction of the product. At the same time, retail
organizations that manufacture and supply health and safety equipment also need to be the
suppliers of British Petroleum (Bp.com 2018).
Coordination
Transportation modes include the manner in which passengers and freight are carried from
one place to another. In the words of Strobl, Bauer and Matzler (2018), the transportation of
goods and suppliers need to be done in a manner that serves its purpose in a quick and subtle
manner. Therefore, the transportation mode for British Petroleum can be the use of roadways.
However, in the case of outsourcing the products like the petrochemical the use of airways
can help the company. Therefore, the transport lane may include:
Product Number Description Mode of
transport
Start date End date
Product06475 Test item Road 23.02.18 28.02.18
Product12769 Test item Air 25.02.18 26.02.18

9LOGISTIC AND OPERATION OIL AND GAS
Table: Product lane
(Source Created by author)
The rationale behind choosing the product mode and the target market for British
Petroleum is due to its popularity in the global market and the manner in which the company
can utilise its product fully for gaining profit for the market. In this regard, it can be said that
to maintain coordination in the supply chain management system, it is necessary that British
Petroleum maintain proper communication methods between the suppliers and the clients.
McAlexander, Koenig and DuFault (2016) stated that the product and service supply chain
management system is different in terms of the market demand and the response time needed
for scheduling the process. However, the similarity is that both the processes are directed to
safeguard the interest of the customers and satisfy their demands.
In companies such as British Petroleum, it is necessary that health and safety of the
employees be maintained. The quality of the product is also an important aspect for the
company due to its reputation in the industry. However, the challenge, in this case, may come
in the form of lack of safety gears. With over 75,000 employees, British Petroleum may not
possess safety gears for every person. At the same time, it is also necessary that the quality of
the products served by British Petroleum be managed by proper monitoring. The challenge in
this can be the fact that the excess amount of products manufactured by the company may
pose problems for maintaining the proper quality.

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2.3. Question 3
Outlining impact of products and equipment
The products and equipment that are newly adopted by British Petroleum may pose
certain threats to the organization. For example, the introduction of equipment that is required
for the proper drilling of the products may be dangerous as the employees may face threat in
using the product effectively. Thus, the physical health of the staff may be under threat, as the
company does not have enough equipment to help in protecting the employees. The reactions
of the organization, in this regard, may include job rotation among the employees. Armstrong
et al. (2015) stated that the job rotation policy could help employees to break free from
continuing with a monotonous line of work. In this case, the employees can use the safety
equipment of the company alternatively with the job rotation. Latest technologies such as
drones can help in improving the human-machine interaction (Turkle 2017). This can be done
as employees can control the machine with the help of drones by avoiding being physically
present in front of the equipment.
3. Conclusion and Recommendation
It can be concluded that British Petroleum needs to undertake a proper logistic
management so that the issues and challenges in the organization can be solved. As such,
some of the challenges that British Petroleum may face is include the lack of planning and
controlling can be due to the absence of employees in the organizations. The movement of
equipment and resources in an organization need to be done smoothly so that an organization
like British Petroleum may continue its dominance in the market. It can be recommended that
in order to ensure that the company does not feel vulnerable in the use of new equipment,
proper training can be provided and more finance can be spent to purchase safety equipment
for the employees.

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4. References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Bosona, T. and Gebresenbet, G., 2013. Food traceability as an integral part of logistics
management in food and agricultural supply chain. Food control, 33(1), pp.32-48.
Bp.com. 2018. [online] Available at: https://www.bp.com/ [Accessed 5 Apr. 2018].
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Coyle, J.J., Langley, C.J., Novack, R.A. and Gibson, B., 2016. Supply chain management: a
logistics perspective. Nelson Education.
Dyckhoff, H., Lackes, R. and Reese, J. eds., 2013. Supply chain management and reverse
logistics. Springer Science & Business Media.
Estampe, D., Lamouri, S., Paris, J.L. and Brahim-Djelloul, S., 2013. A framework for
analysing supply chain performance evaluation models. International Journal of Production
Economics, 142(2), pp.247-258.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain
management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain
management. John Wiley & Sons.
McAlexander, J.H., Koenig, H.F. and DuFault, B., 2016. Millennials and Boomers:
increasing alumni affinity and intent to give by target market segmentation. International
Journal of Nonprofit and Voluntary Sector Marketing, 21(2), pp.82-95.