Indian Oil & Gas Industry: Process Optimization in Logistics Operations
Indrajit Singh
General Manager – Ports and
Logistics Envision Enterprise Solutions

This article narrates the scope of process optimization in logistics operations in context of Oil and Gas industry. The author here has given a special emphasize on installation of easy-to-adapt and quick-to-implement IT systems to make the logistics scalable

The geographical intricacies and diversities in oil and gas projects include, but not limit to, complex transportation networks, inventories, material handling, trade competitiveness, and information technology system; thus always requiring a sophisticated logistics system. Right from extensive seabed exploration of the gas involving seismic, geological, and geophysical operations to extraction involving drilling of the seabed, rig installation, and engineering to the complex refinement process for the final transmission to the end consumer whether wholesale or retail; the logistics system not only merely requires meticulous planning and execution, but also optimization induction at every single stage; and all this with calculated cost-benefit analysis which is most pronounced in oil and gas industry.

Having said this, the wide varieties of input materials and services required at varied but short frequencies for the operations to move the extracts when challenges prevail all pervading. Production operations become the customers that use the output of exploration. Oil exploration from seabed or river bed has a customer, refining has a customer, and selling the final product has a customer; this certainly has multi-party intere distribution and transportation.

Procurement, production, distribution, and transportation in energy sector can be significantly addressed by careful market segmentation. A good on-hiring and management of offshore supply vessels including route optimization techniques, and proper cargo lashing & security aboard OSV’s for multiple rigs rotation always helps optimizing oil logistics. Having a decent fleet of trucks suited to the carriage of materials and parts for oil rigs and multi-modal transportation coordination for door to door or base to base has high yields. Deploying an excellent health, safety, and environment policy at the management and operational level has always helped in reducing the logistics expenses. It has been observed that cross platform partnerships and increased sharing of responsibilities among the multiple players of logistics system plays lasting impacts on oil and gas production and transmissions – be it shipper or carrier. Drilling companies working with material suppliers, equipment lessors, logistics service providers, and multi-modal operators have successful contribution in diminishing the overall logistics cost.

The rapid advancement in the field of virtualization in oil and gas industry demands flexibility in a way these companies work, in simplifying the data management and access with a view to convert the entire logistics chain into a value chain rather than the service chain. And the ongoing consolidation in the industry requires: an easy-to-adapt and quick-to-implement IT systems for logistics which is scalable enough to handle the predicted volumes in future, a logistics software which can cater to user-needs featuring visibility, optimization, cost reductions, and quick decision support right from field workers to the top management level.

In times when AI/ML has ensconced in all the sectors, it’s application in material requirement forecasting the oil platforms, and thus getting advance visibility kindles an effective supply logistics planning ensuring responsiveness at the same time given very wide portfolio of requirements for the platforms. Not just materials forecasting but also the entire demand forecasting of the final produce of the wells, demand planning, and getting it embedded into operational planning will have effective logistics system. Demand variability, creating ripples upstream and downstream, can be kept under control by quantifying it. Consolidating hundreds of suppliers into a single sourcing point requires the acumen and support of good IT systems.

Firms should also pay close attention to offering a tailored suite of products and services which in turn will increase the revenue per unit spent on logistics; let’s name it personalization of the logistics services, which actually means that – right from Government bodies, to facility operators, to marketers, to drilling companies, to economic experts, and to engineers: all coming under a single and tightly knit umbrella for studies, exploration, and execution of the oil and gas projects amalgamated with logistics network planning that helps the entire ecosystem.