The downstream sector of the natural gas industry is widespread, with broad tentacles and scopes. This includes crude supplies, refining, trading, marketing, product distribution and retailing. That being said, the downstream gas sector is faced with a lot of challenges.
These challenges are brought forward because the capacities of global refining are continuously constrained for expansion towards profitability. This is why there are various phases of the industry that need to be addressed. Due to this, many players in this industry are turning their refining configuration towards some changes. Let’s have a look at ten such changes that need to be implemented by the downstream natural gas sector in order to increase its profitability.
1. Business Joint Ventures
The downstream sector seems to always be constrained because of a lack of Information Knowledge Management (IKM). In order to overcome and arrest these problems, various companies will have to join forces and form alliances. By doing so, the industry will be able to integrate and target their operations towards the same purposes while spreading the risks.
The best example of this can be seen in the case of the joint venture of Shell and Cosan in Brazil. One of the greatest advantages of their synergy is decreasing pollution by 70 percent and getting more environmentally accepted in tight legislative regions.
2. Global Refining Capacities
It has been found that there are significant chances of global surplus if capacities are increased in certain regions such as China, the Middle East, India, and Brazil. The cumulative impact of this will result in higher margins which will have a net growth of somewhere between 25 to 30 percent higher than existing capacities.
3. Corporate Communication
This involves managing and orchestrating external and internal communications – which will result in creating a favorable point of view among the various shareholders. Communication across platforms is necessary here in terms of employees, media, partners and so on. With the help of this, missions can be explained throughout the organization in order to gear it towards its vision and purpose.
4. Distribution Activities for Oil Products
Trading and distribution are among the most vital aspects of the oil and gas industry. Without coming up with the most appropriate avenues in terms of trading, the operations of the gas industry will simply be futile. This is why corporations should ensure the value chain is properly examined so as to ensure efficient distribution and trading of products.
5. Crude Supply Mechanism
Reliable transport systems should be employed as part of the supply mechanism in the industry so as to reduce overall costs. This can be done with the help of information technologies that completely integrate the process from suppliers to customers. One example of such technologies is the integration of an Enterprise Resource System or a state-of-the-art solution such as the GTL project being used by Qatar Petroleum.
6. Health, Safety, and Environmental Security
In the oil and gas industry, the safety of humans and the environment, as well as the protection of health, should be the number one priority. One way to implement safety methods to reduce concerns is to ensure compliance with theISO15926. Other than this, some requisite technologies can also be used, which recognize and monitor gas leakages.
7. Refinery Incapability and the Need for Expansion
Lately, it hasn’t been very easy for the natural gas sector to be able to meet the challenges of its refining capabilities. This is why so many automated devices can be incorporated as an expansion strategy for refineries. These automated technologies can allow natural gas companies to increase their efficiency of operations.
If the production cost of gas is somewhat high, then the price of this form of energy will naturally be quite high. Factors like extraction are challenging because of the inaccessibility of some regions to this resource. This is why information technology can again swoop in to save the day. With the help of these, all the alternative sources of gas can be discovered to meet the demand for natural gas.
9. The Cost of Services
Another big challenge for the downstream oil sector is the increased cost of services. This results in cuts in the value chain from production all the way down to refining and transportation. What if most of these processes are virtualized? This will result in a decrease in hardware incapability and increase and simplification of processes like management, maintenance and deployment.
10. Economic Uncertainty
It is common to be faced with risks and slow movement of resources due to economic uncertainty in the downstream gas sector. Information technology can again help these organizations greatly influence the organization’s economics and activities. CAD and CASE are good examples of such technologies that completely change the production system and bring forward the development of goods that satisfy consumers on time.
With all of the above-mentioned practices, most of the common challenges of the downstream gas sector can be addressed and effectively handled. As a result, these practices can bring shareholders greater returns on their investments.
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