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Downstream: Process & Technology: Mass Balance/Inventory Management Systems

Opportune is partnering with an undisclosed oil refiner (“the Client”). The complexity of the refinery and its strategic position allow it to be ideally situated to participate in the International Maritime Organization (IMO) 2020 regulation, which will require ocean-going vessels to cap the amount of allowable sulfur content in bunker fuels to 0.5% m/m compared to 3.5% m/m currently.

The Client engaged Opportune at the advice and recommendation of other private equity companies for two main reasons.

First, Opportune served as the interim Controller and Treasurer providing key process, necessary oversight and services for accounting, accounts payable and treasury. Opportune personnel provided support for the development and implementation of the SAP ERP financial reporting systems. The team developed project accounting reporting for the refinery restart and terminal operations. In addition, Opportune was key in assisting senior management in closing the $1.3-billion financing to restart the refinery.

Second, Opportune was tasked to build out a mass balance/inventory management tool. Being private equity, the focus was to concentrate the dollars on physical construction and have the systems buildout only be with a practical, fit-for-purpose solution. The Client engaged Opportune as a result of our experience elsewhere with other startup refineries, such as PBF Energy and Monroe Energy.

The project included the initial design, development and testing of the inventory management/mass balance model, along with the buildout of associated processes. Through the course of the effort, the scope has expanded to include Master Reference Data clean-up, commercial process development and support of reporting for the intermediation agreement.

The project first went live with the terminal data in late summer 2019. Daily, the Opportune team processes the ending physical inventory, estimated custody transfers and actual inspection reports to provide a complete picture of the total inventory movements for the entire terminal customers. Opportune professionals added value by providing greater transparency and a higher level of detail in inventory than was previously done under other management teams. Volumes are reconciled daily to work out discrepancies and issues associated with the business, capturing of data, inspection reports or other processes.

Through each of these diverse roles, our value has been to bridge the siloed departments of back-office, operations and commercial and create a forum through which important topics are discussed daily. The work has highlighted the importance of process improvement and communication. First, as the interim Controller and Treasurer, our personnel set the tone for cross-communication and end-to-end processes in the back-office. With inventory reporting, the theme is still the same. Cross-communication and partnering is critical to solve issues in a timely manner. Speed is critical as upon go-live, the team will be producing daily inventory reports. Reports will be provided to executives, trading partners and other banking partners. Positions will be managed to properly hedge product and ensure all are abiding by the supply and offtake agreement and its many provisions.

Beyond the initial development of a mass balance/inventory management model, the project has also had an opportunity to document scenarios and requirements necessary for a custom technical solution. The team is focused on helping the Client prepare for custom system development.

Our team has had positive feedback from the Client for the daily value we bring to highlight and help solve process issues or think through critical business operations and how to model them in the system.

Whether it’s deploying major trading platforms, analyzing market opportunities, managing financial reporting or developing information technology strategies, Opportune’s team of professionals has the depth of energy expertise and industry knowledge to assist trading organizations and their partners in achieving their strategic vision. We have a unique combination of professionals with specific commodities trading skills along with consulting, technology and operational experience. For more information, CLICK HERE.

Patrick Long

DirectorOpportune LLP