Production in IS Oil&Gas

[Former Member]

Hello All:

I am a PP Consultant with experience in Discrete, Repetitive and Process Industries scenarios, but I never worked with Oil & Gas so I have pretty basic doubts on that. I have already read a lot in help.sap.com but would like to address you a basic question:

- In PP / PI / REM I have always a cost object (Production / Process Order or Cost Collector) and I saw no such thing in this IS. I am used to see goods issue and goods receipts with this object and I saw In this IS a lot of 309 movements.

So the question is? in Downstream, how do I produce my products? How are they costed if there is no (at least I could not find) cost object?

Can anybody help me with this issue?

Thanks in advance

Luis Henrique

[Former Member · Accepted solution]

Hi,

Production in IS Oil is being done using PRA. Material used in PRA should be non valuated material, since standard PRA does not provide Accounting interface.

Downstream production can have process order, product cost collector etc. for the production process.

Costing in upstream oil & gas is definitely different from the any other mfg industry.

I hope this helps

Thanks & Regards

Kalpesh Chavda

[Former Member]

Hello Kalpesh, thanks for your answer.

So, in Refinery Process, I am obliged to use the 309 movements with non valuated stock or can I use commom PP-PI Proces Orders? I mean, in the processes I saw from SAP, they did use 309 movements to 'produce' materials in the refinery process.

Luis

[Former Member]

Hi Luis,

In the refinery process you can have valued material and have process order/product cost collector as well. but Usage of the process order or product cost collector is mainly from the accounting perspective.

Production process are generally handled by refinery in their MES system.

Just to mention production process for refinery will involve CO-product and by-product configuration. In refinery, from one raw material (raw Crude) multiple semi finished/finished products.

Costing within refinery process for the product produced by refinery is complicated subject, in order to cost a product within SAP environment, you need to get data from the MES is produced

I hope this helps

Thanks & Regards

Kalpesh Chavda

Edited by: KalpeshChavda on Jul 14, 2011 10:39 AM

[Former Member]

Hi Kalpesh, sorry to insist on this, but you were the only reliable answer I could find in several foruns, so I have to push some more.

I understand that IS Oil & Gas is to be used for all processes, such as Upstream, Downstream and primary and secondary distribution, so of course, all branches in customizing settings might not be used in our refinery scenario. The material from SAP describes all production processes as 309 / 201 / 551 movements, as you have mentioned before. By using PP-PI with PI sheets we can fit the scenarios and make the goods issue / goods receipts and also solve somehow our costing problems (Process Industries is a known scenario) but, by doing it this way, we are not using the features from IS Oil & Gas, or you understand this should / could be this way, I mean, do you have experience in refinery using this PI scenario?

I insist on this, because I saw a lot of Oil&Gas specifics on the scenario, such as complex unit convertion, for volumn, density and so on, and I do not know if by using regular PP-PI I can fit all requirements. I know this is consulting problems, but the point for me is just to confirm with you if the PI scenario is common for use in refinery, since I could not find references to it.

Hope you can help me with this last one (you have already helped me a lot)

Thanks in advance

Luis Henrique

[Former Member]

Hi Luis,

Please hold on for some time. I will be back to with you answers in this weekends

Thanks & Regards

Kalpesh Chavda

[Former Member]

OK, no problems

Thanks

Luis Henrique

[Former Member]

Hi Luis,

Application of IS oil specific material in the refinery will be mainly on the raw materials.

Crude will be a raw material for the refinery, crude will be managed as IS OIL specific material, when goods receipt for the crude is done, IS oil specific parameters will be recorded and standard qty will be calculated.

You need to ask the business, whether different batch of crude are being mixed up while in stock, this process of mixing up different type of crude is called as blending. how to value raw material and whether batch-wise costing is required or not is something needs to be decided looking at the business requirement.

Blended crude may or may not be required to kept as IS-OIL specific material.

Process order for the refinery can be created based on business requirement, whether refinery will be considered as one unit or process unit wise process order will be created is something needs to be decided based on the amount of information available from the MES system.

Co-product and by-product from the refinery may not be required to managed as IS-OIL specific products.

I hope this information is useful to you. I hope you will understand most of the decision on ariving at right costing model for a refinery is consulting and not SAP related consulting.(Offcourse SAP limitation will play part to decide right costing practices)

Thanks & Regards

Kalpesh Chavda

[Former Member]

Luis,

very informative discussion between you and Kalpesh.Chavda, I am curious were you able to use the knowledge gained from this thread with an actual oil/gas client, and if so did you formulate a concise and clear product costing methodolgy for the client in both downstream and upstream processes. It would be very helpful and informative if you could share such a document even if it is via a link. Thanks in advance.