IS Oil F&A Pricing –Introduction to

Configuration

This documentation gives a general description to deep configuration on business background of F&A pricing
usage in Oil and Gas industry; why use it, how it works, and how to implement F&A pricing in your system.
Author: Shichang Ma

• Background on page 1
• How it works on page 1
• Introduction and Configuration on page 2
• Formula Condition Type on page 2
• Formula Pricing Condition Record on page 3
• Formula Repository on page 4
• F&A pricing in Sales Orders on page 5
• F&A pricing Configuration on page 7

Background
In Oil and Gas industry, the price of certain petrochemical products like Benzene, Ethylene et al may vary
every day. Since the shipping process for petrochemical products can take long, especially when the shipping
method is sea/marine, it is common that the price is determined by the average of these prices over a
time range (a week or month) plus a surcharge. Third party providers like Argus, CMAI, Opis publish the
market price of these products on a daily basis; these prices are commonly known as quotes. In order to
accommodate the business need to calculate the price of an order based on external quotes over a period of
time, SAP introduced F&A pricing in IS Oil.

How it works
Before formula pricing is introduced or implemented, businesses used to use spreadsheet for price calculation.
Simple ones can be average of 1 week quotes on Benzene, while complex ones can be like 0.91Benzend
+0.3Ethylene+surcharge then average by one month. Spreadsheet would work fine if you have ten orders
a day requiring spreadsheet calculation, but imagine when you need to refer to your spreadsheet hundreds
of times a day, finding the right spreadsheet, plugging numbers, coming back to SAP... In IS oil F&A pricing,
these special formulas can be stored in the system and later used by sales order or purchase orders for
automatic calculation. It is assumed that you have a good understanding in how standard pricing procedure
works, thus we will not go into condition technique in this documentation. Formula pricing is differentiated
at condition type and condition record level. Comparing to regular pricing, F&A pricing has a formula to be

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IS Oil F&A Pricing –Introduction to Configuration

maintained for each formula pricing record, it enables variable dates for calculation, and further allows client to
define multiple rules and compare two calculation results and pick the desired final rate.

Introduction and Configuration

Formula Condition Type
Formula pricing is identified at the condition type configuration in V/06. Formula pricing has the
calculation type as Q, commodity Price, while regular condition types have the calculation type as
percentage, quantity, fixed amount, weight, etc…

Formula pricing condition type:

Regular pricing condition type:

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IS Oil F&A Pricing –Introduction to Configuration

Formula Pricing Condition Record

The difference in the calculation type would affect your screen in VK11. Below there is a screenshot of how
VK11 for formula pricing looks. Note a new icon for maintaining formulas showed up, while scales is no longer
an option, nor can you enter a number amount directly for this condition record.
VK11 for formula pricing

After you make an entry for your condition record like what you do with regular conditions, select the line and
click on maintain formula and it will take you to the screen where you can create a new formula. Note this is the
first method of creating a formula. You can also choose a pre created formula repository in the system.
You can use/access a formula in various places, including: condition records, sales documents, billing
documents, purchase orders, info records. You can also create formulas inside the condition records in these
places.

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IS Oil F&A Pricing –Introduction to Configuration

Formula Repository
Formula can be created directly using T-code O3I7. As SAP convention, O3I8 is for formula change, O3I9
for display. Once you give a name for the formula, system takes you into the below screen for formula
maintenance. Note you can copy and modify from an existing formula by clicking on the Repository Proposal
icon as below.

If you click on “Final and Provisional Rules”, you will see the following screen for date
determination maintenance. You can either assign fixed date range or let the system determine
date range by specifying the rules at Reference date exit, Ref Date Offset, time unit of measure,
# of time unites fields.
Reference date could be GI date, or Pricing date, after system decides a reference date, you can
offset it to a base date, e.g. 1 of next month, Monday of next week. Time unit of measure and
st

# of time units are applied to this base date and form a time range. There is also a check box for

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“Excl base date”. By selecting this field, you determine that the quotation on the reference date
is to be excluded during the calculation of the quotation in the defined time period.
You can also specify how currency conversion should be calculated if you are working in multi-currency
environment. A detailed explanation on the meaning of these fields can be found in this link.

Normally two sets of date determination will be applied for a formula, provisional and final. This
is used in case you don’t want to wait until end of month to bill the customer, thus you define
a provisional date using one week quotes and by the end of month you can rebill the difference
between provisional determined price and final determined price to the customer. With that
said, in your pricing analysis you might find the status of a formula price to be either provisional
determined or final determined.

F&A pricing in Sales Orders

Let’s take a look at how Formula pricing works in sales orders. When you go to conditions tab in
item level, you can find a magnifying glass in front of formula condition type.

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After clicking on the magnifying glass, it takes you into the formula details just like what we see in O3I8

Note A term has a status of “01, evaluated successfully using final rule”. We discussed this
previously in maintaining a formula.

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From here, you can further change the formula by clicking on “maintain formula” icon, you can
save the changed formula under a different name. You can also click on second level analysis
to view how a condition value is arrived. The screen will list all the quotas and their values. The
format of this report can be customized in SPRO

Before we go into the configuration on F&A pricing, let’s first do a quick comparison on formula
pricing and regular pricing from a high level.
Regular pricing:
Fix date only from pricing date, condition value maintained manually in documents or determined directly from
record in VK11
Formula Pricing:
Both fixed date and variable dates possible, condition value determined in directly through formula, while
formula can be maintained in sales/purchase documents or VK11. Dependent on formula and external quota
feeds

F&A pricing Configuration

Pre-requisites before you start F&A pricing:
1. External quotations
2. F&A condition records
3. Routine for date determination
4. Access sequence
5. Formula Condition types assigned to your pricing procedure

Configuration for F&A pricing can be found in under Industry solution Oil & Gas (Downstream) menu path in
SPRO.

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External Quotations
Quotations are brought into sap either by daily feeds through interface or program, or entered manually
through Transaction code O3I2. You can also use sm30 and enter table V_OICQP. In standard SAP external
quotations are stored in table OICQP.
You can use quotation source, quotation type to differentiate different quotations needed for the
business, and define characteristics like currency, UoM, calendar under “Define quotation data”.
Maintain formula & Average Pricing user exits
This is where you maintain/develop pricing related routines. We’ve seen them during explanation
on formulas; this is the central place for all routines development. You can also access this screen
by entering transaction code O3F5

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