Oil and gas companies need a tremendous amount of goods and services to make them successful in their operations.
But the purchasing process varies from the size of the projects, For small projects or low volume items they buy in two ways:
This way, oil and gas companies buy without involving competition from other vendors.
That means a purchasing manager call or email a supplier to bring certain items. And they do this for suppliers who always deliver quickly or for the suppliers who are near to where they operate.
Once oil and gas companies need goods and services, they send an email to suppliers and ask them to give them the prices of such goods or services.
The quotation involves the list of goods and services with quantities and specification that are required by the purchaser and the terms and condition of the purchaser. Quotation helps oil and gas companies to decide which company to patronize.
But for the big projects, the purchasing process is entirely different.
Purchasing Process In The Oil and Gas Companies For Big Projects.
The truth about oil and gas industry is that some supply or contract opportunities have a long sales cycles. A good example of this is when you seek to be a major supplier of Oil companies such as Engineering. Procurement, Contractor (EPC).
In this kind of procurement, oil companies take too long to make a buying decision. They want to be sure that a supplier has capacity and capability for provision of goods and services.
This involves the procurement of huge quantities of materials or high technology services.
The purchasing process in big oil and gas projects are:
1. Issue Request For Information(RFI)
The first step in selecting a preferred supplier is issuing RFI.
RFI is a document issued to public w requested interested suppliers to give the basic information about their services products and organizations. And suppliers should describe how they can meet the procurement requirement. It helps interested suppliers to understand the prourement requirement
The RFI contains procurement requirement that interested suppliers must fulfill. Here are an example of oil and gas companies procurement requirement in RFI.
- Supplier experiences.
- Types of goods and quantity.
- Meet health safety and environment standards.
- Your commitments to promote local content.
- Strong Business Ethics.
It also helps the oil companies to get general information about suppliers that help them to get a short list of potential supplier for products and services.
Oil companies use the information whether supplier meet the procurement requirements or not.
2.Issue a Request For Proposal
Once RFI is produced, Request for Proposal is issued to the shortlisted suppliers.
The primary objective of the RFI is to collect more information about the supplier and find out whether suppliers have the capability and capacity to provide goods and services in the project.
In other words, RFP is released to the shortlisted suppliers to provide them with more detailed information about the work.
And suppliers are requested to submit the responses in a specific time framework.
After the tender response expired, procurement determents will evaluate all the tender documents received from shortlisted suppliers using criteria different from those used in the RFI process. All unsuccessful suppliers will be notified. And a supplier with a high score will be selected as preferred supplier for provisions of goods and services to the project
BOOM! now you are about to smile at the bank. The preferred suppliers will be invited to negotiate a supplier agreement contracts. representatives from supplier company will authorize a contract through a formal signature.
Hope this helps. Good Luck.