Framework for Strategic Procurement Optimization in Oil and Gas Operations

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@article{1713119,
      author = {Chineme Scholar Okonkwo, Olufunmilayo Ogunwole, Obinna ThankGod Okeke},
      title = {Framework for Strategic Procurement Optimization in Oil and Gas Operations},
      journal = {Iconic Research And Engineering Journals},
      year = {2018},
      volume = {1},
      number = {7},
      pages = {153-168},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1713119.pdf},
      abstract = {Procurement functions in oil and gas operations are increasingly recognized as strategic drivers of cost efficiency, operational reliability, and risk management. The sector?s inherent complexity characterized by capital-intensive projects, volatile commodity markets, stringent regulatory requirements, and dependence on highly specialized suppliers necessitates a structured and integrated approach to procurement. This abstract presents a framework for strategic procurement optimization designed to enhance value creation across upstream, midstream, and downstream oil and gas activities. The proposed framework is built around five interrelated pillars: governance and policy alignment, demand forecasting and spend analysis, supplier strategy and relationship management, contracting and commercial optimization, and digital enablement. Governance alignment ensures procurement activities are consistent with corporate objectives, regulatory compliance, and health, safety, and environmental standards, thereby strengthening accountability and transparency. Demand forecasting and spend analysis integrate procurement planning with operational schedules, enabling improved cost control, reduced variability, and proactive sourcing decisions. Supplier strategy and relationship management emphasize segmentation based on criticality and risk, promoting long-term partnerships, performance-based contracting, and local supplier development. Contracting and commercial optimization focus on standardized contract structures, balanced risk-sharing mechanisms, and effective contract lifecycle management to enhance predictability and minimize disputes. Digital enablement, through e-procurement platforms, enterprise resource planning systems, and data analytics, supports process automation, real-time visibility, and evidence-based decision-making. The framework also embeds risk management and performance monitoring through defined key performance indicators, continuous feedback loops, and adaptive procurement strategies. By integrating these elements, the framework positions procurement as a strategic, value-generating function rather than a transactional support activity. Adoption of this framework is expected to improve cost efficiency, supply chain resilience, supplier performance, and overall operational sustainability in oil and gas operations, particularly in environments characterized by uncertainty and resource constraints.},
      keywords = {Strategic Procurement; Oil And Gas Operations; Procurement Optimization; Supply Chain Resilience; Supplier Management; Contract Management; Digital Procurement Systems.},
      month = {January},
      doi = {https://doi.org/10.64388/IREV1I7-1713119}
  }