As soon as emerging technology solutions are able to connect supply chains, improve productivity, and allow for huge cost savings, digitalization is expected to have a significant, long-term effect on digital oil and gas solutions.
After the pandemic, environmental agendas and businesses’ need to ensure economic security are driving the need for digitalization, which could help consumers and suppliers alike balance productivity with financial gain and environmental benefit.
As technologies that have the potential to streamline downstream oil and gas supply chains, such as the Internet of things (IoT) and digital twins, data analytics, and blockchain are being promoted, they will cut costs and emissions at the same time.
In the meantime, autonomous machines and new exploration tools are enabling upstream operations to access deposits that were previously inaccessible. Let’s examine how digital tools are potentially shaping oil and gas supply chains.
A ripe investment opportunity
It has long been recognized that maintaining strong supply chains is a crucial component to enhancing economic stability and maximizing a company’s value, with digital tools increasingly viewed as means to accomplish this goal by improving predictability and reducing operational expenditure at every step along the supply chain.
As the industry has grown, supply chains have become more complex, as it has traditionally relied on basic logistics activities such as trucking and warehousing. Operating through every aspect of business, from trading to shipping to inventory visibility, brings with it a host of new challenges.
Supply chains have not only grown in complexity, but they have also undergone significant upheaval after the pandemic, with significant delays and setbacks in transport links, material handling, and plant locations that GlobalData analysts say will take some time to repair.
In addition to increased exploration, production, and refinement activity, the sector needs to rebound from the full of the past year.
Digitalization might make all this possible, helping to address the broad range of challenges encountered across the supply chain, resulting in an industry that is well oiled. A push for digitalization is so strong that some analysts have suggested the sector may end up as a global laggard if it fails to incorporate digital tools.
Despite the uncertainty riding high in the industry to this point, it appears that oil and gas companies are paying attention to the shifting landscape, as predictions indicate that this is an investment sector waiting to take off.
According to a study conducted last June, nearly nine out of ten respondents (89%) anticipate a significant increase in their investments in digital tools over the next two years. Only 11% of respondents anticipate flat investment, and none anticipate a decline.
As well, GlobalData predicts global IoT revenues in the energy sector will reach $59 billion by 2025, compared to $34 billion in 2019.