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Oil and gas forms the backbone of any thriving economy. They form the core constituent of energy required for sustainable growth of both developing and developed countries. The first thing to note about the oil and gas supply chain is that it is exceptionally long, astonishingly complex and requires the investment of huge sums of capital. The supply chain in oil and gas consists of operators (oil companies), main contractors, subcontractors and suppliers. Oil companies are big and getting even bigger through mergers. They are subject to various political pressures which does not help with oil prices fluctuating greatly.
The oil business is supremely a volume game, so from a supply chain point of view the question is one of not only moving huge quantities of material that is hazardous and highly polluting, but also trying to ensure that it doesn’t remain in one place for too long – the normal supply chain principles of keeping the stock moving towards the next payment point is complicated by the volumes and the inherent slowness. The upstream portion of the supply chain covers exploration for reserves, the conveyance of the crude or gas into storage tanks, its sale and transport to the storage facilities of the new owner and its conveyance to the refinery. One of the defining characteristics of the whole upstream supply chain is its long lead times. The midstream portion of the supply chain is essentially where the manufacturing takes place, where the crude oil (feedstock) is transformed into a variety of products: diesel, leaded petrol, unleaded petrol, specialty chemicals and so on. Downstream begins outside the refinery as the petrol goes to the depots around the country and then on to the retailers.
The three elements of this supply chain operate separately to greater or lesser degrees. The communication between each of them is low and tends to be restricted to what is necessary. Therefore the integration of the 3 processes is the biggest challenge that the industry faces but before that, standardising the sub processes is a prerequisite for the integration to work. Shortening lead times with introduction of e-business solutions is an area which needs immediate focus. Safety and security threats to the world's oil and gas supply chain forms another challenge faced by the industry. Comprehensive solutions that address both safety and security are required.
Aqua MCG’s strong consulting experience and in-depth domain knowledge helps to approach client situations logically. Aqua MCG endeavors to render business leadership and complete execution support for end-to-end supply chain management. We distinguish ourselves by providing both high-level strategic advice and hands-on approaches to improving performance. |