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The Oil and Gas industry took a massive hit during the lockdown in 2020. Statistics show that India’s Oil & Gas consumption came down to 238 million tons in 2020 from 263 million tons in 2019. But things appear to come back on track. Projections show that the oil & gas consumption in the country will be at an all-time high of 265 million tons in 2021. However, numerous challenges persist that need immediate consideration:
Decreasing downtime and improving equipment reliability are two of the most critical challenges for oil and gas companies. Companies need to constantly run their equipment within the optimal range as mentioned by the Original Equipment Manufacturer (OEM), which helps boost the “Mean Time between Repair Replacement.”
The aging workforce is a massive challenge for every oil and gas company—the main reason being the high amount of risk and volatility in this sector. As a result, when experienced employees leave, companies feel the pressure of onboarding new contractors and employees. But the main problem is that they are less experienced in their jobs and unfamiliar with how processes are executed. Therefore they need a lot of training sessions before they can perform their job efficiently.
The oil and gas industry is susceptible to various large-scale events, such as shutdowns, turnarounds, lockout/tagout, and equipment isolation events that require a lot of planning and a few days, weeks, or months to return to normalcy. Also, oil and gas companies are an easy target to large-scale accidents during shutdowns and need extra care and planning to keep employees safe.
The oil & gas industry needs facility and equipment inspection at regular intervals. These inspections require emergency response equipment, temporary structures, operational readings, moving equipment, ladders, and much more. In addition, these inspections ensure that the processes go on efficiently, that there are no communication lapses between various departments, and that full measures are taken to ensure employee safety.
Oil and gas companies need to be wary of leaks and spills as they can cause massive destruction if not controlled on time. Many cases have been reported where employees have got third-degree burns or died due to failure in delivering a quick response.
The answers to the following questions will help you know whether you need ERP software to manage your oil and gas enterprise efficiently.
The oil and gas industry involves several processes, such as drilling, extraction, purification, and distribution, making it challenging to select the right enterprise resource planning software for this industry. This section will give you a detailed explanation of the features of Sage X3 ERP software for the oil and gas industry and you should implement it in your company.
The oil and gas industry involves expensive assets, such as a refinery, offshore drilling rig, and trans-national pipelines. ERP software allows oil and gas companies to check whether they are underperforming or functioning at their optimal level?
Amortization and depreciation are integral components of financial reporting, which the ERP software uses to optimize profits.
The oil and gas industry follows a glocal model meaning that it has a local headquarters with subsidiaries in multiple countries. As a result, the refineries, oil rigs, and customers are spread across the planet, which increases the burden of being compliant with various taxation laws. ERP software allows oil and gas companies to provide tax details to respective tax agencies quickly and conveniently. On the other hand, a manual approach increases the probability of human-induced errors. Also, it wastes the time of the workforce that could be utilized for performing mission-critical tasks.
Oil and gas are the two most essential commodities for companies operating in this space. Therefore, every company aims to purchase maximum quantity at minimum prices to boost their profits. However, Overstocking and missing discounts can lead to significant losses in the long term.
This sector is also precarious because it’s impossible to predict precisely where the oil exists under the ground or in the sea. Moreover, it’s also challenging to estimate the quantity of oil. Thus, oil and gas ERP software has the extra responsibility of managing variable inventories.
Oil and gas are valuable products, but they also pose a severe threat to the environment. ERP for oil companies monitors the extraction, refinement, and purification processes. They also track distribution losses in solid, liquid, and gaseous forms and enable conversions between multiple units.
Moreover, each company has varying requirements and needs to adhere to different norms and rules. Therefore, the quality control module of the ERP system ensures that companies can meet all the specified guidelines.
Business intelligence is gaining ground across each business sector. It helps make accurate forecasts and determine the future conditions based on historical records, transforming market trends, changing customer preferences, and altering geopolitical conditions.
The business intelligence feature of ERP for the oil and gas industry helps understand demand and supply relationships and stay abreast of compliance requirements.
Today, India has a massive network of 10,419 km of crude pipeline with a cumulative capacity of 145.6 MMTPA. Moreover, the gas pipeline is spread over a length of 16,226 km and is expanding rapidly. Also, India has around 600 MMT of proven oil reserves.
In 2017, India was the third-largest global consumer of oil globally, and since then, the consumption has only gained momentum.Some recent developments happening in this industry are:
The oil and gas industry is one of the eight core industries in India. The future of this industry looks bright and the government of India has built a comprehensive plan to build a conducive investment ecosystem. For example, the government has allowed 100% FDI in petroleum products, natural gas, and refineries.
In his recent keynote address, Mr. Faud Al-Zayer, the head of the Data Services Dept. at OPEC Secretariat told that the oil demand is expected to rise by 1.4% per year and constitute a mind-boggling 36.5% of the world energy mix by 2030.
Another good news for India is that the government has opened avenues for foreign investors to invest around USD 300 billion in the oil and gas industry as the country eyes on reducing oil imports by 10% by 2022.
Numerous challenges in the oil and gas industry need immediate focus, such as reducing the shortage of critical materials and components, observing how much each department is spending on data, staff, and infrastructure, and facilitating cross-departmental data exchange approvals.
Here are the top benefits of ERP system for the oil and gas industry:
ERP system allows oil and gas companies to detect issues and resolve them quickly. For example, it can intercept the message from a field system and forward it to the troubleshooting team for resolution. For example, drilling operations take considerable time. Thus, the ERP system can set up automated alerts for field activities that are delayed.
Capacity planning is essential for every industry as it helps estimate the size of the workforce, raw materials required, and equipment needed. For example, ERP for oil and gas companies helps achieve a reasonable forecast, perform complex analysis on historical data, and create automated systems for performing jobs more efficiently and in a fraction of a second.
Typically, the supply lines are too long as they travel from the main headquarters along various booking agents and suppliers to reach the end-user. Thus, companies must maintain excellent relationships with multiple stakeholders to resolve contractual issues and access oil and gas supply. ERP solution maintains the free flow of information between different parties that allows easy collaboration.
Cyber attacks are rising rapidly. According to the report revealed by Ponemon in 2019, an average data breach causes companies to lose USD 3.92 million. So it’s an alarm bell for oil and gas companies if they want to secure their assets from falling into the hands of hackers.Fortunately, an ERP solution has data security modules pre-loaded with the latest encryption algorithms that protect assets, especially pipelines, from hack attacks and shield the organization from making significant losses.
Input is sent from field units to the central unit through a complex pipeline network in the oil and gas industry. As a result, data from different field units must be standardized to be recognizable during the integration process. Sage X3 is the best ERP software for the oil and gas industry because it helps convert proprietary data into a standardized format that stakeholders across the enterprise can analyze.