While working in one of my projects related to PRA from last 3 years, I often came across the queries and questions from many of my colleagues like


“What Exactly the PRA is??”


“If it is accounting software, then is it a sub module of SAP FI/Co?


“Where does PRA fit within the suite of solutions offered within SAP ERP IS Oil??”


Over the years working in PRA I had the opportunity to address the above queries .I will use this forum to help answer these questions; though it is just the beginning I would be enhancing this space with more info.


The first and foremost is to understand “SAP IS-Oil”.


SAP has developed the leading integrated industry solution for the entire value added chain of the Oil & Gas industry. IS Oil & Gas is a vertical industry solution specifically designed and developed for oil and gas industry. It caters all the streams of oil and gas industry namely Upstream, Midstream and Downstream.


Upstream operations consist of exploration and production of the crude oil or gas. Starting from geological survey this covers extraction of oil or gas from the reservoirs.  

Downstream operations consist of refining of the produced oil and gas and making it more commercially viable.

And Midstream operations involve transportation of the oil and gas products via different modes of transport, with pipeline being the most common one, intermediary storage and retailing.

Below mention are some Wiki links to give you more information about oil & gas industry and its operations.


Upstream: http://en.wikipedia.org/wiki/Upstream_(petroleum_industry).

Downstream: http://en.wikipedia.org/wiki/Downstream_(petroleum_industry).

Midstream: http://en.wikipedia.org/wiki/Midstream.

PRA i.e. Production and Revenue Accounting is one of 4 major solutions SAP ERP IS oil offers to the upstream industry. The other three are

1.      Joint Venture Accounting – JVA

2.      Remote Logistics Management – RLM

3.      Production Sharing Accounting – PSA

Primary task of PRA is to fulfill the production and revenue accounting requirements of Oil & Gas companies. That is to say, it focuses on accounting for the total volumes produced, determining the value of those produced volumes, and settling the financial, compliance and regulatory transactions related to those produced volumes.


The production of crude oil and gas is highly asset intensive activity. All facilities, from well heads to living quarters on off-shore platforms must be consistently maintained and kept in good working order to ensure 24×7 productions of these highly valuable resources. Data such as well test and downtime, captured via a Field Data Capturing System, serves as input to PRA. Once crude oil & Gas is produced, they must be accounted for total product volumes produced and the value of the products produced. Once volumes and values of the products are determined, they must be allocated to relevant owners (i.e. those who have an equity share in producing area). They must be allocated to sales contracts, where the oil and gas company must fulfill volumes promised to purchasers.

PRA is not a sub module of SAP FI/CO. In fact FI/CO has only one integration with PRA the Journal Entry (JE). JE as such is book keeping module which holds the financial details of each transaction concerned with revenue. PRA is an accounting software, hence its task within the life cycle of crude oil and gas production falls beyond many of the business processes whose primary focus is facilitating the efficient production of crude oil and gas and not just responsible accounting.


Below diagram depicts primary business process flow of PRA.


PRA.jpg

The main processing areas of PRA are Production, Contractual Allocation, and Valuation. Each of these areas (shown in the figure above ) have a check mark that indicates changes to prior periods of processing will generate a notification for all the effected periods to be rerun so that they are updated with the changed information.


  • Ownership – permits you to set up and determine owner information, i.e. those who own the producing area and other parties who are involved in exploration and production of oil and gas wells.
  • Production – utilizes allocation rule data to allocate product volumes back to originating well completions.
  • Contractual Allocations – Utilizes contracts and pricing information to allocate volumetric information to contract levels.
  • Balancing – Captures and tracks the differences between actual and entitled volumes and give the user a way to adjust those differences.
  • Upstream Graphics – provides the navigational and graphical approach to defining all the entities and set ups necessary for performing a production allocation within PRA.
  • Valuation – calculates the values of volumes allocated in production and contractual allocation. It also calculates taxes and marketing charges.
  • Revenue Distribution – distributes the values, taxes and marketing charges among all stakeholders.


Valuation and Revenue Distribution are business processes applying to the solution provided to companiesoperating with within the US.


At last just to add some more information about PRA is that it was not built as a SAP designed solution, however it was acquired by SAP as PREMAS solution from PWC in 1998. Starting 1999 the PREMAS code base was converted into R/3 based ABAP product. Razorfish was the company which completed COBOL to ABAP Conversion.


Let me know if you have any specific question or any feedback by giving your comments. I will try to answer your queries as per my updated knowledge 🙂

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  1. Sridhar Bolisetti

    Hi Karan,

    Nice explanation.  Does that mean IS OIL solution doesn’t have FI and CO modules in addition to PRA ?  If we have PRA, will it satisfy all those functionalities what we usually get from FI and CO modules ?

    Because in case of ISRETAIL, it’s not the case.  Could you delve more details from finance perspective.  Thanks

    Regards,

    Sridhar

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    1. Karan Mehra Post author

      Hi Sridhar,

      I will try to explain this.


      FI/CO is a part of ERP box.PRA has only one integration with FI/CO and that is through JE (Journal Entry)


      Now how the JE works.

      .

      Journal Entry is a set of processes that takes files  or  you may say a batch, with records representing financial transactions in PRA, edits the data in the files/batches, and posts the file/batches to JE accounts.


      The JE Posting Module is automatically called by the various PRA application areas. For example, whenever you create a Valuation, Revenue Distribution, Checkwrite, Check Input, Tax and Royalty, Owner Suspense, or Accounts Receivable document, the JE Posting Process is automatically triggered.


      Whenever journal entries are posted, the data for each journal entry is posted to two separate tables: the JE General Ledger, and JE line item tables (one of the ten line item tables, based on what type of financial transaction is involved).

      The following Journal Entry line item tables exist:

      • ·  Miscellaneous Line item table
      • ·  Inter-company Line item table
      • ·  Owner Payable Line item table
      • ·  Legal Suspense Line item table
      • ·  Statistical Line item table
      • ·  Income Line item table
      • ·  Expense Line item table
      • ·  Tax Payable Line item table
      • ·  Accounts Receivable Line item table
      • ·  Accounts Payable Line item table

      When the batch is accepted, the set of line items for the batch is summarized on a company code, accounting period, batch number, and account number and FI document line items are formatted and posted to SAP FI .  BAPI is used as an interface to post to SAP FI.


      For more details you may refer to below link.


      SAP Library – SAP Oil & Gas (PRA – Production and Revenue Accounting)

      Regards,

      Karan Mehra

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    1. Karan Mehra Post author

      Hi Ferdinand,

      PRA is an upstream module.

      It is specifically designed in a way that it accounts for the total volumes produced from the wells, determining the values of those produced volumes, and settling the financial transactions related to those produced volumes i.e. distribution of revenue generated among all the owners involved in the process of production including marketing, tax and other costs.

      Downstream is an entirely different component and is having different flow design.

      Hope this answers to your query.

      Regards,

      Karan Mehra

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  2. Paulo Vitoriano

    Hello Karan,

    Thank you for a very good post on PRA!

    There is a common opinion that PRA is targeting primarily the North American market, that is due to specific calculation rules and legal/fiscal output forms.

    PRA Production on the other hand is completely independent and universal component that can be used in any geography.

    Out of 7 mentioned submodules of PRA, can you mark them as N.America specific or available for global use?  And I am talking about standard PRA delivery, since many things can be done with ABAP and that is another story.

    Thank you,

    Paulo

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  3. Karan Mehra Post author

    Hi Paulo,

    If we talk about standard PRA , then Production, Ownership and upstream graphics are the modules which can be universally accepted, rest all the modules are North America specific. However other modules can be customized to cater specific business needs but as such standard modules do not support them.

    Hope this answers your query.

    Regards,

    Karan Mehra 

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