By: Sakthi Prasad --
10 June, 2014
Oil exploration and production companies spend a lot of money on Oil Country Tubular Goods (OCTG), whose market size usually averages about $30 billion. OCTGs are nothing but drill pipes, casings and tubings that are widely deployed in oil fields. These products form an integral part of the energy landscape.
Category managers, who are in charge of procuring OCTG products, keenly focus on the supply situation as well as pricing scenario.
At present, there are no established sources that publish real time prices of drill pipes, casings and tubings. The prices that are currently published by certain sources are at least a week old.
Moreover, prices are available only for standard products such as Casing J/K55, Casing L80, ASTM A519 and so on. Whereas a category manager will struggle to find the right prices for premium OCTG products such as high-strength and corrosion-resistant alloys simply because they are not readily available.
Also, there are no sources that publish price forecast for various grades of casings and tubings. From a business point of view, it will be helpful for procurement managers if they have an idea about the future prices of tubular goods.
Given this scenario, category managers will find it helpful if they have a tool that can forecast the prices of various OCTG product grades.
An accurate price prediction with definitive "Go/No-Go" criteria will be an invaluable tool for category managers in planning their OCTG purchase cycle. This will help them to keep a tab on the kind of prices they end up paying the suppliers.
Consumption of drill pipes, tubings and casings are highly correlated to drilling activity; and drilling activity, in turn, is a function of oil and natural gas prices. However, this linear relationship does not really help category managers to extrapolate OCTG prices.
Effective extrapolation can happen only if we take into account the prices of raw materials that go into producing OCTG products.
During the Webinar scheduled for June 25, Beroe's Oil & Gas experts, Sreyanshu Padhy and Mahesh Radhakrishnan, will talk about their proprietary pricing model that will help category managers to track the prices of various grades of OCTG. This model will help determine the future prices of both standard and premium grades of tubular products.
Key Take Away:
LiVE Event: Category Management For Procurement Professionals