A breakdown of the oil and gas supply chain into its three key segments- upstream, midstream, and downstream—with a focus on what matters for procurement and logistics management.
Understanding how the oil and gas supply chain functions is essential for making smart sourcing decisions, managing risk, and reducing total cost of ownership. In the oil and gas sector, logistics is more than just moving materials—it's a critical link in a high-stakes, high-cost value chain.
In this article, I break down the oil and gas supply chain into its three key segments—upstream, midstream, and downstream—with a focus on what matters for procurement and logistics management.
Upstream: Exploration & Production (E&P)
Upstream operations involve locating and extracting crude oil and natural gas from beneath the earth’s surface.
Key Activities:
Geological surveying and seismic testing
Drilling and well completion
Early-stage separation of oil, gas, and water
Logistics Procurement Focus:
Specialized transport and equipment:
- Moving drilling rigs, casing, and chemicals often requires heavy-lift or time-critical logistics.
Vendor selection:
- Choosing reliable suppliers for remote or offshore locations is essential.
Sourcing strategy:
- Long lead times and volatile oil prices make it crucial to balance availability, cost, and supplier risk.
Your procurement challenge:
Ensuring reliable access to materials and services in remote areas while controlling costs and minimizing downtime.
Midstream: Transport, Storage & Processing
Midstream links upstream production with downstream refining. It includes the transportation, temporary storage, and preliminary processing of crude oil and natural gas.
Key Activities:
Pipeline and tanker transport
LNG processing and storage
Hub terminal operations
Logistics Procurement Focus:
Transport mode optimization:
- Choosing the right mix of pipeline, rail, road, or marine based on cost, speed, and safety.
Carrier management:
- Working with vetted providers who meet strict HSE and compliance standards.
Storage contracts:
- Negotiating capacity and flexibility in strategic locations.
- Your procurement challenge:
Securing efficient, compliant, and scalable logistics networks to handle large volumes with minimal risk.
Downstream: Refining & Distribution
Downstream operations involve refining crude oil into finished products like gasoline, diesel, jet fuel, and petrochemicals—and getting those products to market.
Key Activities:
Refinery operations
Blending and quality control
Bulk and retail distribution
Logistics Procurement Focus:
Last-mile fuel distribution:
- Procuring reliable carriers for high-frequency deliveries to stations, airports, and industrial clients.
Inventory and demand alignment:
- Coordinating procurement with real-time product demand to avoid stockouts or overstock.
Compliance and quality:
- Ensuring logistics partners adhere to environmental, safety, and product quality standards.
Your procurement challenge:
Delivering refined products efficiently and reliably while maintaining brand and regulatory standards.
Why This Matters for Logistics Procurement
Each segment of the oil and gas supply chain presents unique logistics procurement challenges:
Segment and Key Procurement Priorities
Upstream
Heavy-lift transport, remote operations, lead times
Midstream
Multimodal transport, storage contracts, compliance
Downstream
Distribution efficiency, quality assurance, ESG
John Wijnen Logistics Procurement helps companies make informed decisions by:
- Identifying and qualifying the right logistics partners
- Designing cost-effective and compliant transport solutions
- Negotiating favorable contracts based on your supply chain realities
- Ensuring supply chain resilience in volatile markets
Let’s Optimize Your Oil & Gas Logistics Strategy
The oil and gas supply chain is one of the most complex in the world—and that’s exactly why strategic logistics procurement matters.
Whether you’re moving rigs to the field, transporting crude across borders, or delivering refined fuel to end-users, your logistics setup should be a competitive advantage—not a bottleneck.
Ready to make your logistics smarter, faster, and more cost-effective?
Contact me via whatsapp today for a no-obligation consultation.
TechnipFMC video : Fundamentals of upstream, midstream and downstream. shows the oil & gas journey from discovery to the end consumer.
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