About Oil, Natural Gas and Petrochemical Industry
The Oil, Gas & Petrochemical industry involves processing oil, gas and similar products. It has three key areas:
- Upstream: Exploring to identify natural gas or crude oil fields and extracting the resource by drilling into wells
- Midstream: Refining, transporting, storing and processing the gas and oil
- Downstream: Filtering the raw materials and marketing and commercially distributing these products to consumers
The most common products made from oil and gas include:
- Diesel oil
- Fuel oil and gasoline (petrol)
- Natural gas
- Liquified petroleum gas (LPG)
- Heating oil
- Jet fuel
These products are used as-is or are the primary materials for other goods, like fertilizers, plastics, pharmaceuticals and solvents. Some trends in the oil and gas industry include:
- Focusing on infrastructure improvements to meet companies’ growth
- Implementing sustainable practices to reduce environmental impact
- Introducing augmented and virtual reality devices in the workplace to inspect dangerous areas
Challenges Oil, Natural Gas and Petrochemical Industry
The oil and gas market can be unpredictable, with prices higher than ever before. These costs mean oil and gas companies need an optimized production chain that adds value to the product while keeping expenses low.
Some challenges in the oil and gas industry include:
- Supply chain terrorism: Supply chain terrorism harms people or property to intimidate a population or coerce a decision from the government. It uses the supply chain to move something disruptive or targets the supply chain. Hubs, vessels, refineries and other oil and gas infrastructure are common supply chain terrorism targets. Certain regions are most at risk for this issue, so oil and gas companies that work in these places must be prepared. Severe attacks could cause operations to shut down, affecting profits and legal compliance.
- Sea piracy: Sea piracy is an act of violence or theft on the seas. Oil and gas infrastructure, such as crude oil and refined product tankers, are common targets of sea piracy. This stolen product results in lost profits.
- Natural disasters: Natural weather disasters like floods, tsunamis and earthquakes damage global supply chains. Weather events can cause factories to close down, which reduces or stops the production of essential parts. Without these parts, the rest of the supply chain cannot produce its final products.
- Geographical risks: The location of your company’s raw materials can affect your logistics and profits. Depending on the region, transportation can be difficult and costly. Geopolitical events can interrupt the region’s production, halting the supply chain.
- Environmental effects: Incidents in your supply chain can damage the environment. This damage may introduce remediation costs for cleaning up the area, and your brand’s reputation may be affected. The rising popularity of alternative and renewable energy is a threat to oil and gas companies.
- Supplier visibility: Your oil and gas business must have total visibility into its suppliers’ practices and operations. By doing this, you can ensure they follow environmental policies, security requirements and other regulations.