Harouge Oil Company was previously named Veba Oil Corporation. It is a joint venture between Libya national oil corporation and the Canadian Petro-Canada. The company mainly operates in Libya and is majorly engaged in developing and exploiting Libyan oil fields based in five strategic locations of the Libyan Coast. The company started its operations in 1955 which was about the same time Mobil Corporation started its operations. Currently, Harouge Corporation has its operations in more than 20 fields. Their operations led to the production of approximately 100,000 barrels of oil per day. Another distinct terminal based in Ras Lanuf is its service point that services more than 15 tankers a month. It also handles 480,000 barrels of oil per day.
The company’s human resource department manages over 2,000 employees. Their operations are evident in the fields of Tripoli and Benghazi. Other areas of operation are Amal, Ghani, and Jofra among other zones. However, the company recently extended it operations into Tibisti and En Naga. Needless to say, its operations also cover its terminal in Ras Lanuf. Since 1981, the company has been able to produce approximately 698,000,000 barrels of oil. This could be attributed to the adoption of new technologies in the production process.
The issues affecting Harouge Oil Operation’s supply chain are the internal and external factors to the company. Its supply chain includes its main contractors, subcontractors and suppliers. The company’s main contractors are composed of their engineering and construction counter parts. Other entities are service oriented companies and other oil companies. Harouge’s procurement process also affects its supply chain and starts at the development and abandonment of oil fields. Most of their partners have relationships with the company from the time the company started its operations (Harouge, 2007).
This study will analyze Harouge’s supplier chain by evaluating all its players and establishing the company’s supply chain as it currently exists
Harouge Oil Corporation supplies its oil through the Libyan government. The company is therefore an integral part in Libya’s oil exports. Harouges oil supply chain is majorly done by its marketing department with the support of other departments like finance, research and development, human resource and the likes. The company’s supply chain was however affected by sanctions posed on the country between the periods of 1992-1995. The company was therefore limited in terms of oils technology and equipments. Nevertheless, Harouge majorly exports its products to major European Nations including Italy, Germany, Switzerland and Egypt and is a major partner of Organization of Petroleum Exporting Countries (OPEC) through the national platform.
Tamoil Italia is a corporation associated with Harouge Corporation and is one of its distribution channels in Italy. Harouge’s main client in this country is API. It has more than 2,100 service stations across Italy and controls a good percentage of the Italian oil retail market. Its market share of Italian oil market is about 5%. Harouge exports about 25.5% of its oil produce to Italy. Harouge majorly exports refined oil products and oil industrial chemicals to Italy (Gale Group, 2008).
Italy is the major European market. Its supply to this market is majorly handled by Oilinvest. Harouge through the Libyan government commands about 80% of the Italian oil needs (but not single handedly). Oilinvest takes care of most of Harouge’s oil exports to Italy. It undertakes this initiative because it is a major wing of the company in undertaking overseas supplies. The company handles about a third of Harouge’s export to overseas markets to Europe. Moreover, Oil-invest takes products processed from Harouge’s refineries to be marketed in Italy and other European markets. A new pipeline network to be built between the two countries will further increase Harouge’s oil supplies to Italy. This new network system is bound to supply approximately 8BCM per annum. Since Libya was previously an Italian colony, Harouge is set to benefit from improved supplies due to improved relations.
Harouge supplies oil to Germany as the third largest oil supplier to the country. This can be attested through German’s investment in Libyan corporations which are basically oil related. After Italy, Harouge sources its next biggest market in Germany. Harouge majorly supplies its German market through the Western Libyan gas project. It also incorporates the Green stream cable pipeline network which is set up under water. The Green stream network was first incorporated by Harouge in November 2004. Cepsa is Harouge’s main client in Germany with most of its supplies being handled by Oilinvest. The company supplies its oil from Melitah, one of its oil fields in the Libyan coast to Sicily. The supply is later diverted to Italy which then supplies it to Germany. Eni is one of the major partners in Harouge’s supply chain because it owns up to 75% of Green stream. However, Greenstream doesn’t exclusively aid Harouge in its supply chain process; it also assists other Libyan oil companies reach the European market. The first flow of the Green stream project comes from Algerian oil companies, after which it joins with Harouge’s Tripoli’s oil fields. This point of intersection is at Bahr es Salam. The Western Libyan Gas project (WLGP) is also co owned by Eni and National Oil Corporation. These corporations have aided Harouge expand its supplies into Italy and German markets.
Harouge’s LNG is majorly supplied from Marsa El Brega, an oil field established by Harouge. Previously, Harouge was deterred by sanctions posed against Libya which affected its supply chain activities by up to 15%. This caused Harouge to lose on deals which could have helped it obtain technological equipment to enable it separate Natural gas from LPG. The Company produces about 19.5 Bcf which is majorly supplied to Spain. Harouge’s main client in Spain is BASF. The main products supplied by the company include fuel oil, kerosene, gasoline and jet fuel. Other companies in Spain who are Harouge’s big clients include Agip, Total, OMV, and Tupras among others. Harouges supply of oil to Spain is set to increase from a 900 mile pipeline network from its oil shores to the Southern part of Europe which includes Spain. Repsol, a Spanish owned company is however a great competitor to Harouge because it also supplies the Spanish market. It also produces approximately 210,000 barrels of oil per day, most of which is exported to Spain. Unlike Egypt and other Nations, Spain is a good supply destination for Harouge because it has no oil reserves.
Harouge has in the recent past purchased a 39% stake in Midor refinery in Egypt in a deal that saw it pay $430 million dollars through the Libyan government. The company bought these rights from Israel's Merhav Group which initially controlled this stake. Harouge supplies Egypt with oil by tankers. There is a pipeline that supplies the oil to the Ras Lanuf Terminal which is then stored in 13 tanks. From here, the oil is loaded onto waiting tankers which then supplies the oil to Egypt. This terminal supplies more than 450, 000 barrels of oil per day and loads more than 15 oil tankers each month. Harouge services these tankers on behalf of other oil companies as well. It also serves National Oil Corporation (NOC) and external partners of the organization who operate on an International scope.
Since it is almost impossible to supply the entire Egyptian market, Harouge partners with other companies and the Egyptian government through the National Oil Corporation (NOC) to supply oil to Egypt. However, Egypt also has its own reserves and gas supply and therefore Harouge has a limited market in this area. The oil is majorly supplied by company tankers but private contractors are also hired or awarded tenders to transport the oil. There is a good road network system that links Libyan oil fields; especially the Ras Lanuf terminal all the way to Egypt. Road is not only the supply network in use because there is an already established pipeline system that interlinks the two countries. This pipeline system is partly owned by Oilinvest who still remain an important supply partner to Harouge. The pipeline network system is still undergoing major infrastructural changes to improve the distribution system (Carbaugh, 2008).
Harouge is a major oil contributor to Switzerland. About half of Switzerland’s oil is supplied from Libyan oil companies including Harouge. However, the supply of oil to Switzerland has been greatly affected by political forces between Libya and Switzerland. The latest scuffle that rocked most of Libyan oil companies including Harouge was the arrest of Mohammed Kaddafi’s son in Switzerland which greatly disrupted supply operations. The impact could not be averted because Harouge operates under the Libyan government apart from the influence of its owners.
Nevertheless, oil is supplied from Harouge’s vast oil fields to its Ras Lanuf terminal, ready for shipment to Switzerland. Partly, the oil is transported through the pipeline link between Libyan shores and Europe which is managed by Oilinvest. This supply chain is fast and reliable but must first pass through Italy because it is the first point of entry in the European market. Oil is then pumped to Switzerland through other European markets. Tamoil, a strategic supplies partner in the Switzerland market imports the oil from the port of Genoa in Italy’s southern shores. It then pumps the oil through its pipeline network to Collombey refinery. Collombey refinery handles more than 50,000 barrels of oil per day through refinement. Harouge therefore controls an average of 300 service stations in Switzerland through Tamoil. Switzerland on average consumes about 243,000 barrels of oil per day thereby constantly sustaining Harouges supply to the country. The country is however supplied by other oil companies as well to bridge the oil deficit Harouge leaves. Harouge in collaboration with other Libyan oil companies has a refinery in Switzerland and therefore the oil supplied into the country is usually crude. Harouge tenders for the shipment of its oils exports to external companies who are offered yearly or monthly concessions to transport the oil. These shipping companies are usually independently owned or state owned companies like the International maritime transport company. Harouge supplies more than 20% of the Switzerland oil per year (Waddams, 1980).
Harouge majorly supplies its oil to European markets through the Libyan government. Its major supplies are handled at its Ras Lanuf terminal. The operations are made possible from it’s interlink of pipeline networks that gathers oil from most of its oil fields. From Ras Lanuf terminal, the company either ships or pumps its oil to European destinations. Its major supply partner in pipeline operations is Oilinvest. The pipeline first lands in Italy then interlinked to other European markets like Switzerland, Spain and Germany. Harouge however experiences competition from other multinational companies in it supply operations and is also prone to political forces that rock Libya and other European destinations.