Common Issues in Oil and Gas Industry
Describe the Common Issues in Oil and Gas Industry, Role of Academic Model in the SCM and Evaluation of the Technological Change.
The Supply Chain (SC) is the most prominent aspect of any organization. To maintain the suitable flow of the SCM, the joint efforts of the team and employees are essential. The best SCM is the process in which the employees or the people working in an organization at different level combine together to provide the best results for the growth of the organization. These efficient efforts will provide the suitable output to the organization too. All the companies i.e. ExxonMobil, Esso, Perenco and British gas are the major contributors in the Oil and Gas in UK. The report shown below, mainly cover the critical aspects of every topic. The major topics cover in this report are the common issues related to the oil and gas industry, constructive critical analysis, technological aspects and many other topics which are helpful in the complete analysis of the Supply chain management of the oil and gas department.
The history of the Oil and Gas industry in the U.K is very old. In this time period, the Oil and Gas Industry had various ups and downs. Simultaneously, the Supply chain of the domain (i.e. oil and gas) is also transforming continuously (Smith & Mahmoodi, 2013). To identify the issues, it is also essential to identify the cycle of exporting the products through SCM. There are various issues which are noticeable in the SC of the Oil and Gas industry. Some of the common issues are defined below:
- The main issue is related to the maintenance of the Supply chain. The management has to make the suitable arrangement in maintaining the logistics related to the Oil and Gas of SC.
- One of the major issues is also related with the complete process of the SCM is that the while production, every domain tries to earn their maximum profit (Cavendish Group, 2016). By this, the actual goal will not complete and it will also affect the supply of the product.
- The tubes and the tubular goods play a major role in transferring of the oil and gas. Due to the irregular supply of the product, the Oil and Gas industry is also suffering.
There are other aspects too which are creating the trouble to the Oil and gas department of the country.
Constructive Critical analysis is the section which is helpful in defining the positive and negative aspects related to the Oil and Gas industry in the U.K. As the Oil and gas industry contributes in the financial aspects of the country, so it becomes essential to identify the common changes and trends occur in the SC of the Oil and Gas of U.K. (OGJ Team, 1998)
Latest trends in the SC provide the strong platform to the Oil and gas business in the U.K. It not only strengthens the financial aspect of the country, but various foreign investors also sign the joint venture with the country for the export of the Oil, gas and petroleum.
Constructive Critical Analysis
Due to the advancement of the techniques and the introduction of the new perspectives related to the SCM, the oil and gas companies like British gas forwarding their thinking skills. Rather than involving in the drilling of oil, the companies are switching towards the development of the reservoirs. By the help of this, the companies can be able to earn the maximum profit in a less time and with a great speed.
The supply chain code of practice (SCCOP) is the latest trend in the supply chain which is mainly helpful in defining the suitable guidelines for the oil and gas industry. The major guidelines issued by the SCCOP are the improvement in the performance, deduction in the unnecessary cost and the healthy increment in the competition (J Mitchell, et al., 2012). By following all these perspectives, the suitable rules and regulations are followed by the oil and gas organizations which will create a suitable environment for the SCM too.
With the positive aspects, there are some negative aspects too which are originating due to the introduction of the latest trend in the market. With the introduction of the new technology and the new rules related to the SCM in the market, the chances of the risk and increment in the competition may also increase by which the issues in SCM may also increase.
There are various changes observed in the Oil and gas industry in the U.K. Some changes are positive and some of the changes are negative too. The recent change which is observed in the SCM is that the current SCM is converting into the intelligent SCM. By this, usage of the oil and gas in the different forms is also observed (A Neslen, 2016). The intelligent SCM is now introduced in the oil and gas industry, which not only provides the best usage of the products, but by this, the inbound and the outbound logistics are also changing simultaneously. The multiple and wise usage of the same resources (i.e. Oil and Gas), conversion of the oil for multiple objectives and easy export of the product are considered as some of the changes which are observed in the SCM after introducing the concept of the intelligence.
In contrast to the environment, the recycling mechanism of the different type of oil is highly appreciable. This recycled oil can be used for various purposes. By this, internally the oil can be used by the country which strengthens the SCM of the country. This aspect of the recycling shows the positive face of the changes. But on the other hand, the environment gets effected due to the oil and petroleum. During the exporting of oil through the sea, the chances of water pollution may increase. The leakage of the gas not only creates the air pollution, but it also weakens the SCM of the domain.
Latest Trends in the Supply Chain
According to the Usage of the organization (i.e. the oil and gas organization of U.K.), the models are divided into two categories named as the descriptive model and the Normative Model. The descriptive Model will be helpful in maintaining the functional relationship and coordination of the company among the local aspects and the outside world (Achilles , 2010). The Normative Model is also considered as the Optimization Model. Every model possesses the different nature and the working criteria. For example, the forecasting model shows the future predictions and the cost relationship model will be helpful in defining the suitable cost aspects related to the organization. The detailed diagram is also shown below which defines the different types and the sub types of the models.
The analysis of the oil and gas retail sector will be helpful in providing the major factors affecting the present size and structure of the oil and gas domain.
The size and structure of the current oil and gas retail sector is highly stable and considered as the smooth source of revenue collection. The retail market of the oil and gas is rising continuously and is providing the best facilities to the customers. But simultaneously, there are also some factors which are affecting the retail market of the oil and gas. According to the vision of the country in contrast to the Oil and petroleum, is that, in the year 2030, the country would like to achieve the most successful supply chain management in the World. But, the factors related to the Logistics are affecting the growth and processing of the supply chain management. For supplying the oil and gas, there is the requirement of the outsourcing too, and it is not always essential that the outsourcing will be successful (THE UK OIL AND GAS INDUSTRY ASSOCIATION LIMITED, 2016). The issues in the outsourcing will definitely affect the retail market of oil and gas. Fluctuations in the price may also consider as the important factor which can affect the oil and gas retail market. Another issue will be related to the increase in demand of the alternative fuels (for e.g. Biofuels) rather than the normal fuel. The organizations feel pressure and due to this, the performance issues are getting common.
Due to the continuous increase in the rising price, it is getting tough for the small companies to establish their own identity in the market. To complete the targets and to manage the amount used in SC, smaller companies have to merge with the large oil and gas producing companies. This not only deploys the SC on the small level, but the small level industries are also facing the crisis. By the mergers and the acquisitions, the big companies focus towards the self-motivated rather than the profit of the smaller companies and their employees.
Changes in the SCM
The exporting of both the oil and gas is also getting costly. With the increase in price and the high rising in the charges of logistics, the oil and gas industry is facing the adverse effects. The SCM involves the various steps in transferring the products from one place to another. The internal rise in the price of the product also influences the SC prices (Shapiro, 2000). With the high rise in the oil and petroleum, the economic fluctuation is also getting common and for the common man, it is getting tougher to manage such hikes in the oil, petroleum and gas prices.
The technological changes are creating the positive as well as the negative impact on the energy retailing industry in the U.K. With the involvement of the most appropriate techniques in the Oil and Gas retailing industry, the industry is successful in providing the suitable services to their customers. Due to the introduction of the technology, the global market is also changing and by this, the multiple options from the same sources are tried to be generated. For example, with the introduction of the new technique in the field of oil and gas, different type of oils can be prepared. The fuel may also be converted into the biofuel, bioethanol and bio propanol fuel. These products will be helpful in the near future when the demand and consumption of the gas and oil will increase (Aliyeva, 2012). The companies like DNV GL, Petrobras, Shell, Statoil, Woodside Partner and many other companies are also using different techniques, so that the potential of the retail sector gets strengthened and in future, the availability of oil and gas will be increased. The usage of the Smart Plant may also be considered as an option which is an example of the latest technology. This technique will also be helpful in providing the suitable results in the future.
The oil and gas sector in the U K holds the very strong position in the retail as well as the bulk supply market. The local as well as the global market is getting benefited from the market. But, some issues and the factors are also affecting the growth and the current size & structure of the retail industry. It is recommended, that it is essential to prepare the future perspectives also with the current aspects, so that the maximum utilization of the fuel can be done. With this, it is also recommended that to manage the supply chain, it is essential to maintain the internal and external factors in coordination. By the help of this, the suitable flow of supply chain can be managed and the chances of issues will also be minimized.
A Neslen, 2016. Oil and gas companies. Shell hospitality tour for EU diplomats branded ‘PR exercise’ by campaigners, 18 March.
Achilles , 2010. The hidden risks in oil and gas supply chains, s.l.: s.n.
Aliyeva, F., 2012. Top 10 Challenges in Oil and Gas Industry. Top 10 Challenges in Oil and Gas Industry, 09 February.
Cavendish Group, 2016. Connecting growth and western markets across the oil and gas industry. Connecting growth and western markets across the oil and gas industry.
J Mitchell, V Marcel & B Mitchell, 2012. What Next for the Oil and Gas Industry?, s.l.: Chatham House.
OGJ Team, 1998. TECHNOLOGY WILL CONTINUE TO PROFOUNDLY AFFECT ENERGY INDUSTRY. TECHNOLOGY WILL CONTINUE TO PROFOUNDLY AFFECT ENERGY INDUSTRY, 30 March.
Shapiro, J. F., 2000. SUPPLY CHAIN MANAGEMENT, INTEGRATED PLANNING, AND MODELS, s.l.: CS.UU.NL.
Smith, D. & Mahmoodi, F., 2013. Emerging Trends in Supply Chain Management, s.l.: Clarkson University.
THE UK OIL AND GAS INDUSTRY ASSOCIATION LIMITED, 2016. Supply Chain Code of Practice. [Online]
Available at: https://oilandgasuk.co.uk/knowledgecentre/supplychaincodeofpractice.cfm
