As the outbreak of the COVID-19 the virus moved China into a lockdown; and, as the main importer of oil and gas,
demand for factories and transport decreased. The oil demand gradually fell,
further reducing the price of oil. The Organisation of Petroleum Exporting
Countries (OPEC) has called a conference to urge leading oil producers to cut
oil supply by an additional 1.5 million barrels to resolve the crisis. OPEC
demanded that the non-participating countries comply with the same guidance,
but a few countries continued to extract oil at the same level of volume. With
more countries declaring lockdowns to absorb COVID-19 spread, in comparison to
a sharp decrease in requirements, the production rate remained stable,
resulting in a big supply and demand gap in the Oil & Gas industry.
Upstream (refers to anything
related to oil and gas exploration), Midstream refers to anything needed to
transport and store crude oil and natural gas before it is refined and
processed), and Downstream (refers to anything related to converting crude oil
and natural gas into finished products) can be narrowly separated into three
main sections. Since many major oil producers, primarily in Saudi Arabia and
Russia, are not reducing their oil output due to the collapse of the OPEC
summit talks, the key downstream supply chain effect is the availability of
resources and personnel to keep production activities and associated
maintenance running by lockdowns and other containment measures. In such a
scenario, solutions such as IoT / AR-VR allowed Remote Diagnostics and Tracking
and Preventive Maintenance using Advanced Al models may have been used
optimally to decrease reliance on the physical presence of staff in production
lines and to decrease the probability of system breakdown at critical periods.
The big oil refineries have not
started purchasing oil from the discovery firms, close to the oil production
situation. However, freight carriers such as transcontinental tankers, rail
tank cars, tank trucks, etc. are being queued up due to the immense market
shortage in the downstream regions of the oil and gas supply chain. The problem
in this pandemic is compounded by maintaining track of logistics, monitoring
oil spillage, and pilferage from containers. There may be some options focused
on new technology that could be deployed to alleviate the situation with
short-term and long-term gains. External surveillance and health monitoring of
containers can include ready warnings for oil spillage and pilferage, and
comprehensive fleet maintenance can regulate transportation modes that are now
overused. The big oil refineries have not started purchasing oil from the
discovery firms, close to the oil production situation. However, freight
carriers such as transcontinental tankers, rail tank cars, tank trucks, etc.
are being queued up due to the immense market shortage in the downstream
regions of the oil and gas supply chain. The problem in this pandemic is
compounded by maintaining track of logistics, monitoring oil spillage, and
pilferage from containers.
There may be some options focused
on new technology that could be deployed to alleviate the situation with
short-term and long-term gains. External surveillance and health monitoring of
containers can include ready warnings for oil spillage and pilferage, and
comprehensive fleet maintenance can regulate transportation modes that are now
overused. Due to the COVID-19 scenario,
the downstream supply chain is potentially the hardest hit. But, with assembly
lines processing oil at the same rate as before, the transition from midstream
to downstream retail room creates a significant bottleneck in the entire supply
chain. With the lockout of COVID-19 lifted in due time, this segment will
almost immediately undergo a huge rise in demand. This would need a very strong
capacity for procurement and transport preparation to satisfy those needs even
though the procurement is overstocked.
Plans to optimize transport utilization,
smart demand-supply match, etc., are measures that may be useful to alleviate
the situation. Digital systems may be configured to use sophisticated machine
learning algorithms to separate end-users depending on the expected rise in
demand, e.g. the travel and hospitality industries are likely to rebound slowly
even with the lifting of the COVID-19 lockout, and therefore will have fewer
energy.
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