Logistics and Supply Chain Management of Petroleum

0
LOGISTICS AND SUPPLY CHAIN MANAGEMENT OF PETROLEUM
DEVELOPMENT OMAN

Table of Contents
1. Introduction............................................................................................................................3
1.1Background Information...................................................................................................3
1.2 Problem Statement............................................................................................................4
1.2.1. The efficiency of the organization............................................................................4
1.2.2. PDOs Transportation and logistics system...............................................................5
1.3 Research Aim and Objectives..........................................................................................5
1.3.1 Research Aim.............................................................................................................5
1.3.2Research Objectives....................................................................................................6
1.4 Research Question............................................................................................................7
1.5 Scope of the Study............................................................................................................7
2. Literature Review...................................................................................................................8
2.1Introduction.......................................................................................................................8
2.2 Overview of Supply Chain Management and Logistics...................................................8
2.2.1 Objective of Logistics and Supply Chain Management............................................9
2.3 Effectiveness of Supply Chain and Logistic in Oil and Petroleum Industry..................10
2.4 Global Oil Industry.........................................................................................................13
2.5 Chain management in the oil industry............................................................................13
2.6 Current Supply Chain Management and Logistics in Petroleum Development Oman.....14
2.6.1 Challenges in Supply Chain Management and Logistics in Upstream Sector........14
2.6.2 Challenges in Supply Chain Management and Logistics in the Downstream Sector
..........................................................................................................................................15
2.7 Innovation of Supply Chain Management in Petroleum Industry..................................15
2.8 Optimization of logistic and supply chain......................................................................16
2.9 Advancement of Technology in Supply Chain Management and Logistics in Petroleum
Development Oman..............................................................................................................18
2.10 Future Strategies for Petroleum Development Oman..................................................19
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3. Research Methodology.........................................................................................................21
3.1. Research Methodology..................................................................................................21
3.1.1 Research Design..........................................................................................................21
3.1.2 Research Approach......................................................................................................21
3.1.3 Research Strategy........................................................................................................21
3.1.4 Research Limitations...................................................................................................22
3.2 Collection of Data...........................................................................................................22
3.2.1 Types of Data...........................................................................................................22
3.2.2 Methods of Data collection......................................................................................22
3.2.3 Primary Data Collection Method.............................................................................23
3.2.4 Secondary Data Collection Method.........................................................................23
3.3 Problem faced in Data collection................................................................................24
3.2.5 Data analysis process...............................................................................................24
Chapter 4: Empirical Study......................................................................................................25
4.1 Findings..........................................................................................................................25
4.1.1 Primary Data............................................................................................................25
4.1.2 Secondary Data........................................................................................................28
Chapter 5: Analysis..................................................................................................................32
5.1 Optimization...................................................................................................................32
5.1.1 Approaches to the supply chain Optimization in petroleum industry.........................33
Chapter 6: Conclusion..............................................................................................................35
Recommendation..................................................................................................................35
References................................................................................................................................36
Appendices...............................................................................................................................43
Appendix 1...........................................................................................................................43
Appendix 2...........................................................................................................................44
Appendix 3........................................................................................................................45
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Appendix 4........................................................................................................................46
1. Introduction
1.1Background Information
PDO or Petroleum Development Oman is one the largest oil and gas producer in the Sun the
major oil-producing companies of the world. PDO is the country's largest oil and gas
producing company. It produces about 610,170 barrels per day (PDO digital fact file, 2018).
The company produces the gross gas supply in the country. The significant stakeholders of
the company are the government of Oman (60%), Partex (2%), Total (4%) and Shell (34%).
the organization has produced the byproduct of petroleum (64.8 million m3/day).
The Company started its exploration activities in 1967 (Mikesell, 2016) there was the
unprecedented rise of the production in the 1980s with the advantage of the latest technology
and the number of well increased subsequently. There was a production of 400,100 barrel
daily and sat holding the stock of 3.9 million as a reserve. (Thunder et al., 2018). After two
years, the oil process decreased rapidly internationally as the supply from the different part of
the land increased considerably. Instead of cutting the human resource, the company tactfully
employed its human resources into research which leads to the finding of the horizontal
wells. (Mikesell, 2016). The improvement of the technology and the consequent application
leads to the production of the oil in high volume. The production overwhelmingly rose by
200 % (Thun et al., 2018). The LNG project was organized in 2002. It gave a new way to
mining, transportation and refining. The strategy has enhanced the production. In the same
decade, the corporation found new three wells with a field of natural gas.
PDO occupies 209 fields for oil production and 55 fields for the production of natural gas.
The corporation is found to have more than 8000 active wells and there are more than 30, 500
km pipeline and flow line. The company as a job provider has employed more than 85,00
workers throughout the world (Thune et al., 2018). There are 46, 0000 contractors and
labourers work for the organization. The company utilizes the contractual division for
production. The task of finding new wells is assigned to different workers or a separate
department. There is separate department for refining and treatment, logistic AND
TRANSPORT OF THE natural gas and oil for the wells (Mikesell, 2016). The refined oil and
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gas are collected inside the country, Mina Al Fahal. It is from Mina Al Fahal that the
products are sent to the destination of the different stakeholders. Consequently, the
organization hardly earns after the production, it receives the cost of maintenance from the
shareholders.
In 2010, the organization entered into partnership with Miraah, an advanced solar project
(Thun et al., 2018). The company focused on the construction of 1.1 Mw solar plants since t
2015. The organization became capable of producing 5900 tons of consumable solar energy
that will replace EOR (Enhanced Oil Refinery). The carbon imprint of the on the ecosystem
will be reduced significantly. The method used by EOR harms the environment. The solar
plant is capable of changing the existing heat from the natural gases without affecting the
natural environment. 290,000 tons per year is an estimated reduction in carbon emission with
the initiative made by the corporation.
1.2 Problem Statement
The industry connected with the oil and gas are facing threat in the global ecological
scenario. One of the major challenges of the industry is to reduce the cost and stay
competitive in a highly competitive business environment. The optimization of the system of
production can be achieved when the production efficiency is maximized with sustainable
supply.
1.2.1. The efficiency of the organization
The primary strategy of the oil industry is to make its business efficient. The organization has
developed and implemented the strategy which supports sustainability and stability (IBP,
2015). Thun et al (2018) logically explained the reason of the shareholder's independence for
the reduction in the transportation and production cost. The adoption of the policy
encouraged the company to save US$1.53 billion. The waste of resources and has been
eliminated by focusing mainly on organizational opportunities optimization (Thun et al.,
2018). The company has held 25 cost optimization review in 2018. It has saved 60 million
dollars in 4 years. The corporation saved 107 million dollars in oil and 54 million dollars in
gas through the optimization process. The lean business efficiency has endowed the
organization with the 152 million dollars through lean business efficiency initiatives. The
program on training on cost control and lean business efficiency has been started and the
company managers and staff were involved in the task.
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The economic prosperity of the organization continues to decline despite the strenuous effort
to the cost minimization and improvement of the efficiency of the organization. The
management of the organization is found to have saved 1.5 billion dollars. The company's
policy to replace the inefficient labour, machines, the procedures related to the logistic
system and contamination failed in the fiscal year 2017 and the company sustained a loss of
USD$2.84 billion dollars. The organization is unable to create efficiency in the field of
improvement.
The economy of the company has been affected by the optimization of the supply chain and
oil and gas. While doing the focus is always on the factors that may affect the delays and
disruption in the optimization of the supply chain.
1.2.2. PDOs Transportation and logistics system
The gas and oil supply chain of PDO is highly complicated compared to other industries
(Hussain et al, 2006). The supply chain process optimization is divided into downstream and
upstream stages. The transportation cost is made high by the foreign companies though the
country is small in size. The impact of the high cost makes the supply chain takes a longer
time to process the delivery system compared to the different industries. Various means of
the supply chain are incorporated: ships and road and pipeline. There is no efficient railway
system of transport. The transportation is associated with higher risk, challenges,
uncertainties incorporating delays, capacities, bad weather condition, environmental impact,
leakage and security and safety. It is reasonable to manage supply chain optimization with the
support of the current system and also develop the optimizing process to enhance efficiency
in the operation process. the complex system of the industry demands flexibility in the field
of operational management. The oil industry transportation system involves different kinds of
the transportation system. the competitive advantage is achieved by PDO in the oil industry.
The challenge and risk of the industry will be overcome by the optimization of the supply
chain.
1.3 Research Aim and Objectives
1.3.1 Research Aim
The purpose of the thesis is to assess the recent logistic system and supply chain of the PDO.
The thesis will attempt to make a clear analysis in the field of the supply chain. The research
aims to identify the process of optimization of the supply chain. The purpose of the study is
to depict the current status of the logistic system and supply chain of PDO with the associated
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challenges and risk in the field. PDO following compliance has developed a way to function
sustainably and stably. To minimize inefficiency, redundancy, and waste, the company has
recently launched a lean program. The previously conducted research will help in the supply
chain optimization process. The research will help in improving the organizational efficiency
of the PDO.
The technological advancement, global trend, and economic mechanism influence the oil and
gas industry. The oil and gas industry can be categorized in three ways: upstream, midstream
and downstream. The oil and gas industry are made according to the asset, function and
business scenario.
Upstream: segment that is generally known as the Exploration and production as it covers
the area of the oil wells, where to locate and it is also determined how far it is a drill. The
process is associated with constructing, designing and managing the operational efficiency of
the organization.
Downstream deals with selling and transportation of the products of the industry. Supply,
renting oil and trading and marketing and retailing is the process under the segment of
downstream.
Both upstream and downstream segments are an integral part of the industry. However, the
current thesis emphasizes the downstream segment as it is a complex system of the
manufacturing and transportation of the refined product. There is an ample space for the
optimization of the entire industry. It can be said here that the supply chain and its associated
process in the global scenario. The company requires developing and optimizing the entire
logistics and supply chain to create efficiency.
1.3.2Research Objectives
It is important to determine the objectives to fulfil the requirement of the aim of the
thesis. The objectives of the thesis allow the study to be more direct and focus toward the aim
of the thesis and the topic of the downstream segment. The objective of the thesis is:
 To assess the appropriateness of the current downstream supply chain in the
organization
 To analyses the risk, challenges and uncertainties in the supply china process of PDO
in the global competitive environment of the PDO.
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 To suggest the best available solution to the PDO for the improvement of the supply
chain management.
1.4 Research Question
 The question has been framed to address the objectives of the thesis:
 Are the workers satisfied with the supply chain efficiency of PDO?
 What are the current challenges, uncertainties and risks of the supply chain of PDO?
 What are the recommended solutions for the optimization of the supply chain of
PDO?
1.5 Scope of the Study
The thesis aims to give a wide scope to the researchers regarding the system's pitfall. The
research is to suggest the improvement of the downstream segment which is more urgently
required in Oman. The study is to reveal the required improvement in the sector for
development. It will also suggest some effective strategies to adapt to the required
improvement. The study aims to analyse the risks and challenges associated with the supply
chain management in PDO. The study is to compare and contrast between the active supply
chain management with the proposed supply chain management.
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2. Literature Review
2.1Introduction
The primary purpose of the thesis is to make a deeper analysis of the logistics and supply
chain of PDO, the associated risk and challenges that the management of the organization is
constantly facing, and the effective measures they have undertaken to come up with the
recovery. The review is to analyse the proposed supply chain management focusing on the
current supply chain management system. The study is to use extensively the secondary data
for the current supply chain management and make an analysis of the supply chain
management for dealing with the challenges and issues in the company. It will also focus on
the way the company will improve. The literature review is to be established collecting
journals, books, academic papers regarding the logistic and supply chain unrelated to the
improvement method used by PDO for strengthening its supply chain. The current literature
review will help to understand the upstream and downstream process and the scope of
development that will make the company have a more successful supply chain with specific
focus on the downstream segment. The forthcoming chapter will deal with the analysis and
gap emitted from the current chapter.
2.2 Overview of Supply Chain Management and Logistics
Supply chain management is an integral part of the company. Therefore, the company
employs all possible modifications for improving the supply chain. The experts are involved
at a different level in the company for making the supply chain efficient and for prodding the
supply chain efficient. The companies are attempting to improve the supply chain for making
the best use of cost minimization process. The supply chain management is an essential part
of every industry, but the importance of the logistics and supply chain in the oil and gas
industry is exclusive. The role of the logistics in the supply chain is immense since World
War II. It has given a competitive advantage to the company recently. Therefore the
companies make different strategies for optimizing supply chain and logistics system which
will allow the company to gain a competitive advantage over other organization.
Digitalization of the supply chain has improved it considerably over time. There is major
digitalization process that helps in strengthening the supply chain management. These digital
technologies are associated with cloud computing, urbanization, internet technology, cloud
computing, 3D printing, advanced drones and robotics.
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The industry was noticed by the tardier very late and it requires to be integrated with the
digital technology in the oil and gas industry. The industry requires to have a better
transportation system and supply chain management. The technologies to manage the
transportation and supply chain are ERP, SCM and VRS.
(Source: Gezdur and Bhattacharjya, 2017)
2.2.1 Objective of Logistics and Supply Chain Management
The main aim of the logistic and supply chain management are as follow:
Achievement of efficient fulfilment: The objective of the supply chain is to make the stock
available for the consumer. It is required to manage the inventory and stock all the time for
the demand of the customer. The organization needs to create a supply chain which
cooperates with the requirement of the organization. The supply chain is to be managed in
such a way that there will be no lack of resources or products for the consumer.
Customer value-driving: The logistic system of the supply chain drive the value of the
customer by providing proper satisfaction (Chen et al., 2014). If the demand of the customer
is fulfilled on time, it will produce satisfaction in the customer.
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Cost Cutting: The reduction of transportation and supply chain management can be done by
the proper management of the supply chain. The reduction of extra labour and transportation
will reduce the cost of logistics and transportation.
Organizational responsiveness enhancement: Supply chain logistics is accountable for
change responsiveness. The current competitive environment changes with time due to
changing global business scenario. Organizations continue to adopt chain to match with the
current competitive environment. The globalization comes as an opportunity for the
organization. The weaker organization cannot sustain change. With the improvement of the
supply chain, the global competitive environment will be affected and it will lead the
organization towards betterment.
2.3 Effectiveness of Supply Chain and Logistic in Oil and Petroleum Industry
The oil and gas industry is required to have a strong supply chain for proper coordination
with the team. Therefore, it is necessary for continuous changes and development in the
supply chain management according to the need of the industry. The oil and gas industry
have complex supply chain management and therefore, the company faces various
challenges. The demand for the oil and gas industry is high throughout the globe. It requires
to have a good supply chain that will help the industry to function efficiently. As expressed
by Journal of Direct Science, the oil and gas industry is known to be the global industry, and
therefore, the function of the supply chain needs to be so. It incorporates the different
processes beginning from searching location from where the crude oil can be extracted for the
marketing of its derivative and refined oil.
The particular study helps one to analyze the major effects of the supply chain management
in the oil industry through four different information technologies, issues raised by people,
design of the supply chain, different partnership or collaboration issues. Here an argument
has been raised that the managing of the flowing information which is the most significant of
all activities. This is the main reason for flowing or the movement of the money or material
which is usually boosted up by the associated information flow or the movement. However, it
can be proposed about the4 present developments related to the system which can be thought
and continue through the systematic simulation in the applied context related to the
framework of management operations. Such a thing may offer the ideal design related to the
supply chain and the development of the performance of the supply chain. As per the
development in the global market will be increased efficiently and no other competition will
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take place between any other individual businesses. However, in the entire value chains, there
are different executives which are helping in the development of the partnership or
collaboration in the supply chain is attempting to reduce the budget as well as develop the
services to gain their competitive advantages. Generally, such cooperation may arise directly
from the side of the relationship between commitments and trust both. However, the research
related to trust which has two different dimensions- benevolence and honesty. However, there
are numerous dimensions regarding trust in the performance of supply chain like always
keeping promises, confidence in a trading partner, good reputation, being honest and close
personal friendship.
Before discussing the supply chain management in the Oil and Petroleum Industry, it is very
important to analyse the background of the industry and on the process of production. The
supply chain related to the petroleum industry is highly complex in comparison with the other
organizations. It is generally divided into two different and closely related segments- the
upstream and downstream supply chains. Generally, the upstream supply chain includes the
acquisition of the crude oil and it is the significant specialty of different oil industries. On the
other words, the upstream process may have the forecasting, exploration, logistics, and
production management through delivering the crude oil from different remotely located oil
wells to other refineries. And the downstream supply chain generates from the refineries
where the crude oil get manufactured into different consumable products. Such consumable
products contain the specialty of the refineries as well as the different petrochemical
industries. However, the downstream supply chain generally involves the entire process
related to production, forecasting, and logistics management of delivering the derivatives in
the crude oil to the consumers around different countries. However, there are different
opportunities as well as challenges have existed in both the upstream and downstream supply
chain.
The logistics network in different petroleum organization is significantly inflexible which
generally generates from the productive capabilities related to the crude oil suppliers,
limitations of different modes of transportation and ling transportation which lead times. All
the points including this network generally represent the crucial challenges. The
petrochemical and oil industries are generally global. Therefore, as an outcome, such
products and commodities can be transferred among the different locations which are several
cases continents apart. Though the long distance in the partners of the supply chain and
transformation related to slow modes induce not only the significant in-transit inventory and
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transportation cost; however, the high inventory cost carrying in terms of stocks safety in the
final location of the customer. There is a very specific kind of transportation system found in
the industry as it requires to transport the oil as well as the by-products or derivatives. Al-
Bulushi, King, Blunt, et al, (2012) conversed about the impact of the oil industry on the
countries of both oil-importing countries and oil-producing countries. as expressed by
Hassan, (2013), he suggested that world politics is deeply influenced by the oil industry. It is
known that petroleum is the major industry that covers the entire world. The industry also
causes pollution. He thinks that there needs to a reduction in the use of petroleum. In turn, the
demand for the oil industry is constantly rising. Though it is said that petroleum is there to
help the humankind but it is meant to destroy humanity.
Hagh, Joshi, Anika, et al., (2018) explained that the oil and gas industry is complex and it is
limited as it has limited access to petroleum products. The supply chain can be categorized
into two parts: upstream and downstream. The upstream mainly focuses on the operation
related to transportation of the crude oil from the oil well to the refining area. The demand of
the byproducts and petroleum is constantly rising, and the associated petrochemical industry
is also improving day by day. It is important that the company needs to have a stronger
supply chain to deal with the customer globally. The product of the industry requires specific
means of transportation system like pipelines tankers and vessels which are not available
everywhere. Therefore, it is required to develop the other industry well throughout the world
(Bove and Swartz, 2016). The petroleum industry can meet the demand of the industry well.
In other industry, it is possible to open a new site for the product for convenience and cost
minimization, but it is not possible in the industry. The petroleum industry solely depends on
transportation and logistics. For the reduction of the cost of transportation, the industry needs
to have an effective supply chain. It will meet the demand of the industry.
The reduction of transportation cost and delivery time will create customer satisfaction.
Supply chain in the petroleum industry is exclusive and different from other industry. It is
highly complex when compared to the other industry. It includes two categories: upstream
and downstream. The upstream consists of the acquisition of the crude oil from the refinery,
and it also deal with forecasting, exploration and delivering the finished products. Upstream
also includes the operation like a collection of production and exploration operation.
Exploration is meant to explore the geographical locations where the crude oil can be
extracted and the company can find resources. In the production, crude oil is collected from
various places and location. The extraction of oil requires complex engineering. It
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incorporates the process of transportation of the products to the refinery where the product
will be refined.
Downstream supply of the chain incorporates the forecasting, production and delivering
process of crude oil for the customers all over the world. So, the organization has recognized
supply chain as the solution to all the problems of long lead time and huge logistic expense.
The downstream segment comprises of refining, procurement, marketing and distribution of
the refined products of petroleum. In the process of procurement, the management of
sourcing is done in the refiner with the right quantity and right way. Refinery is a space for
refining crude petroleum which is to be used by the customer. It is done as per the forecasting
of the demand associated with the product through tight marketing process. Distribution is the
most important part of the industry. In this process, the organization make sure that the right
product is placed in the right place. Marketing activities are associated with the marketing
sales and promotion of the product.
2.4 Global Oil Industry
Global oil industry finds a new way to manage its downstream segment in the supply chain
management. Due to the excess use of oil in the global market, the industrialist and
researchers took the sustainable approach towards managing the supply chain. Managing
supply chain of petroleum at global level gives a new life to the industry. It is known to all
that the oil is a traditional and exhaustible resource which will soon reach its
existence(Ahmad et al., 2016). The supply chain of the oil industry has been taken to the path
of sustainable development comes from the adverse environmental impact that the industry
has cast over the environment. The possibility of finding such resource in future is difficult.
Adopting a sustainable approach is the need of the hour. PDO as a part of the global oil
industry has also adopted the sustainable approach in their supply chain management and
transportation of the products. The experts of the industry have realised well that
sustainability will engulf some root causes of the problems. The United States is known to be
the leading oil exporter. The prices of the oil industry are determined by the United States
and other oil-producing countries and 94.7 million barrels of oil was produced worldwide.
2.5 Chain management in the oil industry
Supply chain management and transportation of the products are part of the downstream
segment of the company. The supply chain management is crucial to the downstream
functioning of the gas and oil industry. The research result depicts that the companies
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associated with the designing, supplying, marketing, producing and supporting the products
do not need the sustainable practice to develop the industry (Abba Adam et al., 2019).
2.6 Current Supply Chain Management and Logistics in Petroleum Development Oman
It is known that supply chain management of petroleum industry is different from the other
industry as there is a complex system of logistics and transportation system. It follows the
complex chain of the procedure with its variety of operational stages. There are specific
procedures of oil refining in which other byproducts of oil is extracted. Logistics system in
the oil and gas industry is also different (Afshan and Haghani, 2012). The refinery requires
using different channel for transportation and after the refining, the oil is transported through
different means. It utilizes the various distribution channel (Handfield, 2016). Therefore,
despite technological advances, the industry of Oman has faced severe challenges and
troubles in the overall processes.
2.6.1 Challenges in Supply Chain Management and Logistics in Upstream Sector
The inventory network faced severe challenge as the nature of the industry involves the
exploration and setting up a refinery in far and distant spaces including the deep water. There
is a requirement of mobile inventory system, and the supply chain requires to have a security
stock at the last area. Moreover, fluctuation of the times of transportation creates
vulnerability in connection with the producing wanted help level and the most negative
scenario may prompt shutdown of the task. Maintenance Repair and Operations (MRO)
products are basic for the upstream organization activities. Similarly, the upstream
organization hardly confide the dependence of the carriage of givers- therefore, the
organization also keep the security stock to use at the time of dying stock. It enhances the
cost and represents the significant test for the upstream organizations. In the operational
stage, materials such as drill bits, drill casing, water, lubricant mud and drill bits and so on
are important items required for the storage when the upstream task is performed in the
distant and remote location. Moreover, there is little abundance in other materials of
extraction such as water, fracking chemicals and sand. This becomes a burden to the
upstream sector.
The oil and gas extracted required to be moved to a convenient location where the products
can be handled well. Here, difficulties are revolving around the setting up of the essential
foundations such as pipeline, streets and so forth. Besides, stringent guidelines and ecological
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guidelines needed the associated gas for the utilization by moving it to the client and not to be
kept on the same site. There is a requirement of the previously set pipeline. The upstream
segment requires an efficient security system as it involves the various kinds of risks. There is
a challenge of the labor crisis which the industry often face. The labor works alternatively,
and sometimes they are sent to the distant location. The work creates fatigue in the labor and
most of the labor does not want to stay in the location. When there is some grave situation
like fire, spill and other HSE related dangers, the management of the industry needs to react
sharply to manage the situation. Their charges and inventory stocks are to deal with well
ahead of time. These attempts will represent administration test.
2.6.2 Challenges in Supply Chain Management and Logistics in the Downstream Sector
As per the discussion regarding the upstream sector and its associated challenges in the
industry of petroleum, the downstream sector faces a similar crisis in logistic and supply
chain management. In a large number of geographical locations, fuel demand and
development is less competitively. The exchange of item expanded due to the lack of refining
limit in the principle extending territories. It sometimes creates shortage of the inventory and
sometimes there is an overflow. It create new markets in the various nations for the other
reefing countries. It also opens new doors for the supply chain and inventory control.
The quality issues are the prevailing thing in the industry as the automobile industry
continuously requires new or improved kind of products (Hall, Matos and Silvestre, 2012).
These expectation do not provide desired result as it requires to keep the facility treatment.
The quality consistence offers a new way for separation. The guidelines regarding nature and
consistence rules are getting tighter day by day, making the activity of the development of
how one can be mind boggling and costly. The liabilities at the time of natural harm and open
picture vulnerabilities are converting in the large obstacles for the industry.
2.7 Innovation of Supply Chain Management in Petroleum Industry
One of the crucible phenomenon in the industry is to manage the supply chain efficiently due
to the highly competitive market. The supply chain in petroleum industry is more difficult
than other industry. Organization associated with the industry needs to be innovative for
reduce the cost of supply chain management. It requires to have an efficient supply chain
which requires the management of national and international transportation. It needs to
manage efficiently the inventory control, information flow and import and export facilitation.
The effective technological application in the field of supply chain logistic can reduce the
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cost and uncertainties in supply chain. it needs to use optimization model for improving
supply chain logistics. There are specific risks associated with fluctuating demand, supply
and price of the petroleum (Bresciani and Brinkman, 2016). Organization needs to be
innovative to generate model for overcoming the associated risks. As there are few providers
of petroleum industry, it needs to generate innovative model of supply chain which will help
organization to reach more number of customers internationally (Hisain, 2017).
The use of the innovative model in petroleum industry is not effective as the petroleum
industry falls to use the traditional method. The traditional method incorporates the manual
labor which is costly and time consuming. It was recommended in Industrial and system
Engineering conference 2017 that the main area where petroleum and the gas industries need
to emphasize the reduction and optimization of operational costs. Three factors are
recommended in the conference which will help the innovation in the logistic and supply
chain management in PDO. These are as follow:
 Increasing visibility of supply chain: To improve the visibility of the supply chain, it
is important to reduce the downtime cost of transporting the slow moving inventories
and parts. It can be done by real time visibility by providing real time data.
 Improving Compliance: There is system in the industry that the organization needs to
be ready with document before the products are exported. Petroleum industry
requires to export oil and it’s by products.
 Enhancing the collaboration of supplier: it incorporates the acquisition of the goods
from the suppliers globally. It is found to be possible to receive products from the
company situation in different parts of the globe.
The incurred cost of logistics for the transportation of the petroleum products are associated
with the two different levels which are from field to refinery and refinery to customers. The
cost of transportation is very high when the output from the refinery is transported as there
are requirements of the specific means of transport (Lakshmi, B. and Babu, 2018). Josh et al.
(2017) commented that these complex web of transportation creates higher cost of
production. There is continuous rise in the products demand and therefore, the requirement to
improve technology is deeply felt. The result will help understand the demand of petroleum
in the petroleum industry accordingly.
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2.8 Optimization of logistic and supply chain
Upstream, midstream and downstream formulate the optimization of the supply chain.
Upstream incorporates the way to find the crude oil and access them through various means.
The midstream deals with the manufacturing unit of the petroleum and gas. It also deals with
the transportation of the petroleum to the different parts. The downstream is related to the
sale and distribution of the petroleum in the market. There are some approached regarding the
oil industry as it has been narrated (Jha, 2016). As expressed by Jha (2016), the primary goal
of the industry is to generate revenue and enhance profitability. The oil industry is to deal
with the supply chain management only to enhance productivity and profitability. This goal
of the industry is achieved by effectively by focusing on five main areas of supply chain
management. The main are that PDO needs to focus are strategic planning, supplier
collaboration, logistic management, enhancing supply chain visibility and logistics
management. The company needs to focus on reduction of the cost of transportation which
will, in turn, enhance the profit from the distribution and generate good revenue. The
business success is necessary. The expectation of success can be achieved through the use of
business success. The process of optimization will help in overall development of the
industry. There is a strategy that the efficient supply chain ensures that the goods and
products are delivered on time.
Supply Chain visibility: the company needs to improve visibility in their project, suppliers,
customer and process of business for safeguarding the monitoring and tracking of goods. It
can be done through the optimization of the entire process of transportation which will make
the supply chain more effective and efficient. As expressed by Shah, LI, and Ierapetritou,
(2010), the cloud based software can be far more effective in optimizing the system. It helps
to give positive visibility to the system. it can manage the complex issue of the system. The
implementation of technology can help PDO to focus on the complex issue of the
organization. With the implementation, the supply chain can function more efficiently as the
transportation time will be reduced, the cost of the transportation will be reduced and it will
allow the employer to take less safety initiative as it minimizes the hazard. It will expand the
system of the company.
Always Remain Complaint: the recent environmental degradation has affected the entire
supply chain. The handling of precuts like oil and gas are risky and perilous, and it is
profoundly controlled with the making of the shipment which is reach worldwide. It also
needs to ensure that the package and transportation can be done in such a way that other do
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not feel unsafe. The production process needs to be enhanced working with the master of
technology. These experienced people encouraged business throughout the world. The
trading and handling can be done in such a way that it did not affect others. It requires
minimizing the risk and enhancing the productivity with reduction in expenditure. An
inventory network advisor is the key factor in mitigating the various dangers associated with
the activities.
Communication prioritization
There is a great significance of the production network in the industry. The production
network enhances with the general range, time zone and guidelines of the government. These
complexities prompt difficulties like deficiencies of stock and ill advice documentation.
Effective use of technology: It helps in connecting one department to another department:
organization to consumer and workers to the corporation. It affects the supply chain as it
makes it efficient and effective, and supply chain remains dependent on the information
availability. Supply chain covers all operation of the company from sourcing to delivering the
final products. Technology provides great support to the organization in resolving and
understanding the demand and supply. The technology helps to understand the current market
condition and the way to sustain it (Wu and Nguyen, 2011). It enhances the profitability. It
also prove useful in resource and product deployment. Without information technology, the
delivery time of the transportation will increase.
Strategic Planning: The company’s strategic planning of PDO consists of generating new
business opportunity, improving relationship with stakeholders, monitoring the supply chain,
developing framework for corporate management, enhancing technology and providing better
benefit and remuneration to the workforce at the supply chain management.
Supply chain collaboration: The supply chain collaboration aims to integrate or create an
alliance for improvement and efficiency in logistic system, and the available data could be
used for building responsible supply chain. It helps to change the logistic supply chain.
2.9 Advancement of Technology in Supply Chain Management and Logistics in
Petroleum Development Oman
 In present days, there are different renewed interests in different consequences and
causes in the technological changes at the petroleum industries in Oman. If one see
through by macroeconomic level, then it can be seen that there are huge number of
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literatures which describe about different impacts related to innovation of
technologies over the economic growth as well as the standards of living which has
been emerged. From the micro level, there are different sophisticated methods which
are increasing the industry’s productivity and marginal or average costs in the
sectarian level. In the environmental and resource related economic literatures the
desired potential effects related to the technological changes generally alleviating the
raising scarcity of the nonrenewable resources and resource price should increase by
the prediction through the simplest variant and with equal rate of interest. If the
progress of technical changes extract rapidly, then there is a chance or possibility
through which the price or cost of the related resource may remain the same or
constant even in the time of declination. Moreover, the empirical failure related to
the predictions of Hotelling's theory explained that the failure is carrying the major
credit in the part of advancement of technologies in the Petrochemical industries in
Oman (Maleki and Rosiello, 2019).
 On one hand, the development of the technology in the petroleum industry may lead
towards the synthetic substitutes regarding such resources which are non-renewable.
On other hand, it may facilitate through excess exploration which is more efficient
for the additional reserves. However, the potential which is offsetting the effect
related to depletion over the prices of resources. As an outcome, the betterment in the
modelling of the extraction and exploration of the optimal resources and maximum
of such effort can be devoted for specifying and estimating the discoveries or finding
costs (Bi, 2019).
 Production optimization: The use of AI is found to be in all segments of the oil and gas
industry. There is a great fluctuation in the estimation of the supply and demand in the
industry, the requirement of the organization to enhance it productivity is a challenging task.
It is necessary to oversee the up gradation of the oil well’s life. This is influenced by the
several factors like weight and stream rates including other things. The utilization of AI and
ML can help in gathering the calculation and information from the various connected sensors
and different gadgets which provide the update subsequently with the ideal working
condition (Olajire, 2014).
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2.10 Future Strategies for Petroleum Development Oman
Development of technology will shape the future of the petroleum industry. It will be quite
helpful in the development of the petroleum industry. There are technologies which will
prove quite productive in the industry.
Smart drilling: smart drilling technology is an incredible technology. It gives a very high
expectation to the industry. It makes the work faster and smarter. It ensures to maintain the
project in such a way
Incorporation of block chain technology
The incorporation of the block chain technology will be effective in enhancing the business.
The experts felt great prosperity in the block chain. The association of the block chain with
the same technology will dramatically improve the business environment. The block chain
incorporation will decrease the hazard o misrepresentation, blunder and invalid exchanges.
The accurate record maintained by block chain will enhance the proficient and
straightforward downstream exercises.
Digital transformation
Digital transformation of the entire supply chain and infrastructure of the industry will be
quite helpful in improving the business in far more effective way. Oil and gas industry has
used the traditional system. it requires to update its system in new way. It helps to keep the
segment changing. It will enhance the practical ability of the office. There is none to deny the
role of innovation in the technology.
Smart Oilfield Technology
The oil industry constantly focusing on the improvement of efficiency and reduction
spending limits. It requires to develop savvy field innovation. All framework will be
associated together for perfect management. . From an innovation stance, the perfect
arrangement would need to flawlessly associate all frameworks and equipment stages over
the different fields of activity, incorporating investigation, boring and creation offices, and
eventually conveying helpful information and video streams to a focal area, enabling the
administrators to settle on better and faster choices (Thorn, Johansen and Hjertaker, 2012).
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3. Research Methodology
3.1. Research Methodology
Research methodology deals with giving an overview of the method that has been followed
for the completion of the study. This chapter includes research designs, methods, and types of
data and collection procedure of the same. This chapter further needs to provide an accurate
justification by specifically identifying the advantages and disadvantages of each approach.
The research methodology that has been considered in this study would aim to take a specific
framework with the set of the practical approaches which is associated with the determined
objectives of the thesis. This section is presented to describe in what way the data is collected
and which type of data is taken to address the issues specifically.
3.1.1 Research Design
The research design, in this case, will be an experimental design including both interviews
and review of selected journals. In this case, the interview is to be conducted for the
collection of primary data. On the other hand, Peer-reviewed journals will be taken into
consideration for the collection of secondary data. The data collection procedure will be
executed based on the research approach and the research strategy of the study. The
methodology is adopted for the study will be od an exploratory nature.
3.1.2 Research Approach
The approach, in this case, is inductive. In case of an inductive approach, a study follows a
logical process for coming towards the result. It analyses the data and therefore leads to its
findings based on the same. In this case, the research design was based on a mixed approach
and therefore different sources were considered for the collection of data. The study has
collected data from both quantitative and qualitative sources. In the case of the collection of
primary data, the study has considered an interview. On the other hand to collect secondary
data the paper has taken into account several journals.
3.1.3 Research Strategy
The research strategy will develop an understanding of how the study is being carried out.
The strategy, in this case, will include several aspects including experimental strategy which
involves creating a process for the research study for leading towards the result. It generally
involves consideration of factors related to the study. In this process, the relationship between
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the factors is analysed and tested against the expectation regarding the outcome. Another
strategy that has been taken into consideration, is the grounded theory. This particular theory
is a qualitative methodology which is related to an inductive approach that has been taken
into consideration in this study. Lastly, ethnography strategy involves a narrow observation
of people for examining their involvement with the subject matter of the study. In this case,
the study has considered an interview for this strategy.
3.1.4 Research Limitations
Certain limitations have affected the study in its completion. As the study has considered
collecting secondary data for literary sources, it was analysed to be a time-consuming
process. Apart from that, in case of a collection of data from journals, verifying the result of
the research creates another limitation for the same. On the other hand, in case of the
quantitative data, it was an issue to verify the reliability of the target populations. In that case,
the authenticity of the answers creates limitation.
3.2 Collection of Data
3.2.1 Types of Data
Data collection is the inseparable part of the methodology of research. There are two types of
data: primary data and secondary data.The process of collecting the data directly from the
sources is known as primary data collection. Surveys, interviews, observations, data
collection from the focus groups are known as primary data collection. On the contrary, the
process of collecting data from the source, where the data has already been published is
known as secondary data collection. For instance, collecting data from the newspapers,
articles, journals or case studies are considered as secondary data collection. As primary data
is collected personally by the researcher, the collected data are more accurate and extensively
related to the domain of research. Besides, the secondary data collection saves the precious
time and money of the researcher, as well as makes the research more easy and harassment
free. To avail the advantages of both the procedures, both primary and secondary data
collection methods are used in the research.
3.2.2 Methods of Data collection
There are two types of data collection: primary and secondary data collection. The primary
data collection incorporates interview and survey. The secondary data collection involves
extensive collection of research articles, journals and websites. The study has involved
extensive secondary data to analyses the current status of the supply chain and logistic system
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of PDO. Along with the primary data, the secondary data has been collected to support the
analysis of the current condition of the company (Yu, Abdullah and Saat, 2014). The
literature review has been done with secondary data. Both types of data collection has been
used.
3.2.3 Primary Data Collection Method
As expressed by Wilcox, Gallagher, Boden-Albala, et al., (2012), there are two types of
interviews: structured and semi structured interview.
3.2.3.1 Interviews
As expressed by Wilcox, Gallagher, Boden-Albala, et al., (2012), mainly two types of
interviews that are there, such as the semi structured interviews and structured interviews.
For the particular research, the structured interview has been conducted as it enables the
research to avail the data which are more relevant to the study area. It is more consistent,
effective and fair. As the questions are planned, the researcher gets the opportunity to develop
the questions and align it with the study area. Moreover, it is time effective as the questions
are already designed. In the semi structured interview, there is a chance that the researcher
could get diverted from the study area during conversation. In contrast, the structured
interviews more aligned with the study area. Hence, the structured interview has been
conducted in the study. The interview has been conducted in three interviewee groups. The
Service Delivery Manager of PDO, Managers of Supply Chain Management and the Senior
Process Associate at supply chain management department of the PDO were differentiated as
the interview groups and they were interviewed.Mainly the open ended questions were asked
to the interviewees. Through the open ended questions, it was possible to avail more
descriptive information regarding the study area. If the closed ended questions had been
asked, the interviewees were bound to the options and had to answer the questions through
single word. As the open ended questions are asked, the interviewees were able to provide
more in depth information regarding the attitude, perception and understanding of the study
area. Hence, the interviewers were asked the interview questions and their answer were noted
and recorded in the recorder for better capture.
3.2.4 Secondary Data Collection Method
3.2.4.1 Peer Review Journals
Peer review journals are written by experts in the field before the article’s publication. It is
used for the quality and relevance of the data (Choy, 2014).
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3.3 Problem faced in Data collection
 The broadly through plan is reduced
 Lack of prior information regarding the primary data collection
 It was difficult to determine the sample size.
 Budget created constraint in furthering the research.
 There was limitation of time and cost.
3.2.5 Data analysis process
As the open ended questions were asked during the interview, the descriptive and qualitative
type data had been availed from the interview. At first, the recorder was played and the noted
data were reviewed to understand the data. From the study of the data, the relevance of data
has been considered. The collected data has been structured and organised for the ease of
interpretation of data. After that, the data credibility has been accessed. The relevance of the
data with the issue has been considered which enabled the interpretation and alignment of
data with research questions.
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Chapter 4: Empirical Study
4.1 Findings
4.1.1 Primary Data
The people involved with the organisation were provided with a set of questions that
evaluates the importance of technology in the organisation. From the interview, the
interviewer can have an overview on the effect of technology on supply chain management
system.
Questions CEO Manager Workers
Q1. Are you friendly
with the use of
technology?
Strongly Yes Yes Yes
Q2. Do you think the
technology will help in
increasing the reach of
production?
Strongly Yes Strongly Yes Strongly Yes
Q3. Do you think PDO
will enhance the
company?
Strongly Yes Strongly Yes Yes
Q4. Is the company
capable of employing
technical handlers?
Strongly Yes Strongly Yes Yes
Q5. Are the processes
capable of better
handling through
technology?
Yes Yes Yes
The interviewee has observed the problems that can potentially arrive from such situation and
henceforth has suggested the measurement to prevent the problem from arising. The process
that needs to be enhanced and made efficient here is distribution. For that, the areas that need
to be scrutinised are integrated supply management, technological development,
organisational restructuring and ethical viewpoint. Through the utilisation of these processes,
the objective of an efficient distribution process can be achieved. Using technology in the
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area of logistic chain supply management will prevent problem areas in the shipment from
arising. Here, one thing to take note of is that the smooth flow of information is essential as
far as the field of PDO is concerned (Dubey et al, 2017). The organisational challenges that
have the potential to appear can be identified and assessed with the assistance of PDO.
Globalisation is a phenomenon that has affected a large number of businesses. In the industry
of shipment, the role that globalisation plays is higher than what it does in most of the other
industries. The area of distribution has been enhanced due to globalisation. As a result of all
these, PDO has evolved to play a larger role than it usually has. Technology can be used by
the management teams in the process of shipment to know about the shipment location and
status. With the availability of such information, the whole process of shipment becomes
more manageable (Pettit Croxton and Fiksel, 2019). The more the information available to
the supply chain management, the better they would be able to arrange the management
processes.
If any information is not delivered in the correct time, or not delivered with a high level of
accuracy, it will lead to a negative situation in the management system. If the people involved
in the management system are not experience enough to not know about such situations, then
it has the potential to create a panic among them. This can leave negative effects on the
employees that can remain with them for a long time. It might come up from time to time and
hence become a permanent problem for the employees. Certain areas need to be made more
efficient to run an effective system of supply chain management. These areas are
sophisticated information technology, better information flow between partners, cost savings
and collaboration with the competitors.
According to the manager of the supply chain management organisation under the purview of
this study, PDO is investing in third-party logistics (3 PL) companies in managing their
supplies across the globe. Third party logistics can be bring out an efficient system of supply
chain management. One of the reasons that can back up the claim is that 3PL companies keep
a large portion of their investment in information technology. With the help of information
technology, the entire process of supply chain management will be simplified. 3PLs also
cater to the new technologies that are emerging in the various areas of businesses. Such
technologies are essential to keep track because they enable the owners of the businesses to
simplify the business process.
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The supply chain management organisation in question is aiming to enhance the level of
management that already exists in the organisation. One thing to note down here is the way
the organisation would analyse and eventually evaluate the effects of technology on the
supply chain management process. For this, the team designated for the job is required to
carry out the task of noting down the positive effects and also the negative effects of the use
of technology. It needs to note down the methods that can bring out a bad effect on the whole
process. Once these negative effects and methods have been thoroughly identified by the
management team, they are eliminated. By following such processes, the biggest outcome
from the supply chain management team is the inculcation of the optimal usage of technology
in the process of Supply Chain Management.
These are the roles of the businesses that are involved in the wholesome process of supply
chain management (Dasai and Rai, 2016)
 Oil Trade: People are involved in the field of oil supply and trading. The oil
shipment industry would need to undertake the task of securing oil before they can
carry out the task of processing of shipment for oil. Before the distribution part,
proper procurement is always necessary. The areas that need to be addressed in the
procurement of oil are price and quality of oil. Securing trade deals with bulk traders
is something that ensures that the organisation do not run out of sources.
 Distribution: Once the material is procured, the next stage is the distribution. Fopr
proper distribution, the oil needs to be kept in proper places so that no harm will be
done to its quality.
 Selling: In this step, it is the managers who play the pivotal role. They decide the
target areas of delivering the materials. Innovative managers implement new ideas to
find new target areas for sales.
Through the process of the interview, the identification of some elements was achieved that
can be used in an efficient model of running the supply chain management process. The
proper use of technology is one of the things that have the potential to enhance the system of
supply chain management. When one uses the term proper use of technology, it means that
the negative areas of technology need to be shelled out of the system. Another thing that
needs to be considered here is that the flow of information needs to be continuous. An
interruption in the flow of information can cause the system to have adverse effects.
Supply Chain management process
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One of the things to note about the use of PDO is that it needs to be updated over some time
since new technologies keep emerging in various areas and the particular technology used in
the PDO needs to be aligned with the new technologies. Many parts make up the whole
process of supply chain management. These processes can be summed up as follows –
refining, processing, distribution and selling.
Through the process of the interview, it is revealed that the production of oil goes through
several stages before it arrives at the stage of completion. During the whole process, the
adjustment of temperature is one of the primarily necessary things to consider. Without the
proper adjustment of the temperature, it will become difficult for the management team to
ensure the quality level of the material. This will then lead to the process of distribution. The
trucks, ships tankers, pipelines would need to possess the appropriate technology that will
help in the maintenance of quality of the material.
4.1.2 Secondary Data
As expressed by Hussain, et al. (2006), the supply chain in the oil industry consisted of
various challenges. In some particular logistics areas, the barriers are seen to be influenced by
the cost structure as well as the derivatives of the petroleum industry. Considering the
Logistics and Supply Chain Management of Petroleum Development Oman, it needs to
undergo a "SWAP" practices in which the companies could save a million dollars (Hussain,
et al., 2006). Regarding this fact, the objectives of this paper shed light on the SC
opportunities as well as the challenges in the petroleum industry. As an effort for managing
the supply chain and the cost reduction of oil and petrochemical companies are seen have the
outsourcing the logistics functions. Despite the essential advantages the study pointed out to
generate the SWAP practices of the companies. The commodity type like petrochemicals and
oils frequently provide a lack of interest while finalizing the customers. Due to this fact, the
adherence of commodity needs the specification to deliver the commodity by the promised
date. Thus the petrochemical companies in Oman alliance the supply chain while delivering
commodities to customers. It can be said that, as suggested by the journal, the swap practice
will enhance reducing transportation as well as inventory costs and developing better
consumer service in the chosen industry. Similarly, the present time, the issues with refineries
in Oman steam broadly from the looting of post war.
Despite the issues across the SC in the petroleum industry, the development opportunities, as
well as the cost reduction, are seen to be existed along with it. In this regard, the Logistics
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and Supply Chain Management of Petroleum Development Oman include the area of
improving cost structure in their logistic function. It is worth to mention that, the petroleum
organizations have become reliant by the services by the third party logistics companies
while managing the SCM (Hussain, et al., 2006). As described in the study, the organizations
associated with the petroleum industry have taken into consideration the outsourcing idea to
adhere to have collaborated with its competitors. The study has referred this “systematic
cooperative reciprocal barter” as Swap practice. Despite the broad benefits and use of the Oil
and petrochemical industry, the study has appreciated the area of operation management in
Petroleum Development in Oman. As opined by the authors (Hussain, et al., 2006), the SCM
and logistics industry provides insight into the infancy supply chain. However, the involved
complexity and inflexibility in petroleum development lead to cost reduction, especially in
the logistics area. In this regard, the petroleum development in Oman seems to consist of the
SCM as a backbone of their business in which the logistics costs become greater than its
manufacturing costs.
Consequently, the study by AlBulushi, et al. (2012) proposed a systematic approach to tackle
the several issues related to petroleum engineering. The workflow covered the various
designing issues in which it constructed the neural network model. In terms of improving the
network structure, the findings of this study applied the model of predicting water saturation
in the oilfield in Oman. According to the findings of the study, the method of water saturation
could be appropriately obtained from the measured data that are removed from the oil field.
However, the study revealed that this information is entirely limited to a less number of
wells. As expressed by the authors (AlBulushi, et al., 2012), the wire line logged data are
abundantly available in a large number of wells. However, in some indirect manner, the
information regarding rocking properties was emphasized by the study. On the other hand,
the findings of this study did a core analysis to provide a direct measurement of the identified
petro physical properties in the laboratory. Despite the resist logging tool, the core
represented the entire section of the formatted drill. Also, the findings of the study considered
the "gamma ray" in which it detected the high energy electromagnetic radiation. Regarding
the SCM and logistics in petroleum development in Oman, the study took the three layered
"Neural Network Model" based on the algorithm back propagation. The study by Costa, et al.
(2012) emphasized on registration in which it asked to help the several organizations along
with assisting them to improve the effective operations. As expressed in the study,
organizations like PDO are seen to be worked amicably with the other relevant organization
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while making out the relevant framework for conceptualized change activities (Costa, et al.,
2012). As the finding suggests, the mentioned changes require being effortless positively
excluding any disturbances. In this manner, the petroleum organizations will be able to
prevent advancement through the broad reserved cost funding and extensive effectiveness
method across the petroleum industry.
According to the Omain, et al. (2010) the various sectors those adopted the SCM practices
emphasize on the working and constraint environment. As the worldwide different sectors
continue a different kind of operation in the petroleum industry, thus the petroleum
development performs the best while distributing and processing the clothes, foods, and
textiles. However, the sector of SCM and logistics found weak in this regard (Omain, et al.,
2010). Hence, the study proposed a relevant framework in which it was expected to identify
the criteria of SCM in the oil industry.
Figure: Proposed Framework
(Source: Omain, et al., 2010)
The above framework depicts that, it is entirely non similar from the other relevant oil
industry by nature. As described in the study, the proposed framework looked to construct
SCM practices in the oil industry. Through this framework, the authors attempted the
identified barriers while implementing SCM practices across the petroleum industry (Omain,
et al., 2010). Also, as suggested by the finding of the study, the aforesaid construction went
through the method of assessment, development and measurement. Throughout the study, the
authors recognized the significance of uncertain manufacturing, the competitiveness of
environment, commitment, trust and integrated internal logistics. The study expressed that
these factors could have omitted due to the length of the survey, rate of response and its
instruments. Thus, the finding may have been more significant whether the method of the
study included the aforesaid factors in the process of instrument. It is worth to mention that,
the important weakness of this finding was the perceived SCM with a narrow perspective. As
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per the finding of this study, it can be said that, during the scale improvement method, only
thirty items could be serviced at the same time. Findings of this study suggested to diverse
the impact of SCM practices in which the unified aspect of SCM was expected to be
considered. For instance, the factors like downstream, upstream and integrated internal could
be enhanced respectively (AlBulushi, et al., 2012). It is worth to mention that the finding and
the analysis of the study mainly emphasized on the key types of supply chain management
strategies in the oil and gas industry. The strategies could be Rationalization and
Synchronization. In terms of Rationalization, it could be achieved through the effectiveness
of cost structure in SCM in Oman. Besides, to ensure great profitability. Synchronization is
referred to as the flawless distribution method in which the right product could be delivered
in the right place at the right time. This procedure involves factors like inventory
management, risk management, routing, and maintenance (Hussain, et al., 2006). However,
the Rationalization process consists of performance planning and supplier selection by
petroleum development.
It is safe to conclude that the supply chain management and logistics in Oman could be
developed through emphasizing the factors in which the cost operation is reduced. Besides,
the Automation in the traffic and trade management could be improved petroleum
development in Oman both externally and internally. It is worth to mention that, Moving
freight directly to the destination without the delay in between the way might reduce the
delivery time to increase the volume of the deliverables in the petroleum industry. Thus,
while considering the present scenario in Oman oil industries, third party logistics could help
the SCM to serve a better customers service (Hussain, et al., 2006). In this regard, the heavy
investment in the third party logistics' information technology is the reason behind it. To
achieve the highest gain, the third party logistics should be based on a solution that affects the
bottom line behavior to avoid over emphasizing the cost reduction at the expenses of goods
and services. Conversely, the SCM and logistics need to enhance the existing technology by
minimizing the risk factors associated with it. Despite the Optimization in the oil industry in
Oman is seen to broadly depend on the percentage of the information technology as a part of
the logistic system. Due to the globalization, the investment in the digitalization of the
logistic process could be the driver of the supply chain optimization. Thus, To improve
profitability more integrating supply chain is essential (Omain, et al., 2010). As a result, the
hostile supply chain in the petroleum industry in Oman requires adopting more practical
change as well as the relevant information system. For instance, the large investment in
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human capital could be ensured appropriately in logistics and supply chain management in
petroleum development in Oman.
Chapter 5: Analysis
5.1 Optimization
The Petroleum advancement Oman is the leader in oil production and exploration in the
Oman Sultanate. This organization conveys dominant part of Oman's unrefined petroleum
generation. It has major contribution in supplying the natural gas. Apart from the activities of
producing the natural gas and conducting the supply management activities, the PDO assists
in development and growth by improving the overall economy. Upstream practice of the
supply of oil incorporates investigation and creation On the other hand, the downstream
procedure includes acquirement, treatment facility, appropriation and promoting. The nonstop
advancement of the data innovation and expository change of PDO is very mind boggling and
need appropriate inventory network administrations. Oman is the little territory, the strategic
stockpile in PDO depends on transportation framework. The expensive and the complex
mode of transportation framework should be straightforward and client cordial. The upgraded
production network the board will guarantee the less conveyance time, better administrations,
and key arranging and successful utilization of data innovation. The improvement structure
and the hazard related with it is been talked about in the writing Review. The chart exhibited
out of sight investigate area indicated that the Petroleum Development Organisation is
moving from Enhanced oil recuperation (EOR) likewise called tertiary recuperation to bring
down cost creation strategies. The portion of EOR is required to represent nearly 25% of the
natural oil generation by the year 2025 from 33% anticipated in 2023. Rather than setting
more accentuation on present moment EOR, PDO is contributing more on the traditional gas
and oil generation. The evaluated decrease of carbon discharge is relied upon to be decline
with the assistance of the plant named Mw Solar Plant. It is found from the semi directed
meeting in the various areas of PDO that it made an oil revelation at Sadad North in Southern
Oman which will represent nearly the amount of 44.5 million bbl of business hold. It likewise
uncovered data like PDO is chipping away at extending the supply of oil not in just in the
Oman yet besides past the outskirts. These suggestion is supporting the destinations of
inventory network advancement and cost sparing.
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5.1.1 Approaches to the supply chain Optimization in petroleum industry
The petroleum industry lacks certain efficiency as per the interviewees when the industry
attempts to develop the supply chain management. The strategy for improving the supply
chain management will needs to be fit for proper functioning of distribution channel. The
product optimization is related to the product's life cycle. Managers are here willing for
marinating the supply chain more efficiently. The management of petroleum development
Oman will adopt effective strategies.
Extraordinary thinking process
The managers of the supply chain of PDO have explained that the planning and strategies
have been made understanding the company’s situation. They chalk out plan effectively
before implementation and create a similarity with other companies which have made
successful venture in the industry. Therefore, it requires to develop the proper infrastructure
and assets. It requires to integrate the supply chain in a good manner to relate with the better
implementation of the supply chain.
Inventory management improvement
It is analyzed from the finding that the organization needs to enter in collaboration with more
dealers and retailers for managing the inventories. The increased collaboration with the more
dealers and retailers will improve the profitability of the company. There is a requirement of
managing the inventory smartly.
Technology utilization
Utilization of technology is the bone of the industry. The findings reveal that the importance
of the technology in the organizational management of the supply chain is highly important.
It will reduce the time and allows to track the information and data of the product. the new
information technology will help in tracking the products of PDO in a better way. it makes
the company able to differentiate themselves accurately.
Thus it can be said that both primary and secondary data revealed that the organization has a
huge scope of development and improvement. Hence, H1, has been accepted in the context of
improving the proper planning and technology for implementing the strategic planning. It
will help in the improvement of supply chain.
Page 34 of 50

PDO has found to have signed the contract for US$253.1 million with local manufacturers.
The organization has found to have initiated 41% contract with local business firms and 53%
contract has been done. The organization has extended its value with the Index Country
Value (ICV) by improving the supply lines and reducing the delivery cost and time.
Management of performance, facilities, management, is the essential components of the
rationalization. The business base has been improved with the transforming ability of the
organization. solar power oil production is the sustainable way of production as it has been
said by the managing director of the company. It is a long term solution of the company's
demand.
In diversifying the economy of Oman, the organization played significant role in petroleum
derivative service. With the innovation and development and technical support, the company
is to enhance its supply chain capability. It is a highly capital intensive industry. It requires an
investment of $ 3 billion. The environmental regulation regarding green house affect has
affected the industry. PDO’s close location of its combining network is an added advantage
of PDO. It will help in the optimization of its supply chain and logistic system.
Figure 2: Supply Chain Managent Process
Page 35 of 50

Chapter 6: Conclusion
The conclusion chapter reveals the summary of the entire chapter. The structure used in the
thesis is well aligned with the objectives of the thesis. From the literature review to the
analysis of PDO’s supply chain management, there are several factors. The finding of the
thesis depicts that PDO is capable of optimizing its supply chain more efficiently. PDO is
found to be attempting to create most efficient supply chain from the sourcing of the raw
materials to the final product. The finding reveals that there are two kinds of supply chain
management strategies in the gas and oil industry. These are rationalization and
synchronization. Rationalization is the way to improve supply chain and rescue the operating
cost of production. Synchronization indicates the perfect distribution system. The process
assimilates risk management, inventory management, maintenance and routine. PDO attempt
to improve both the system. The literature review revealed that good supply chain is made of
two things: distribution and manufacturing. The review indicated that there is a requirement
of technology with improved ability to resolve the current issue with the supply chain and
logistic system. The focus is laid in the downstream segment. PDO creates hassle free
distribution system with effective supply chain.
Recommendation
 The reduction in operating cost can be effective in managing the supply china of the
organization.
 The sustainable approach is to be taken in transportation and supply chain
management. The reduction of delivery time can improve the transportation system of
the supply chain.
 The deliverable volume can be enhanced with the reduction in the transportation cost
and delivery time.
 The supply chain of PDO needs to integrate and create alliance with other logistic
services for timely delivery of the products.
 The quality of the goods and services need to improve.
 The development of the information technology will improve the logistic system of
the company. Therefore, it is advisable to the company to align the company with the
logistic system to integrate with companies having great information technology
background.
Page 36 of 50

Page 37 of 50

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Appendices
Appendix 1
Interview 1
Interviewee: Senior Process Associate at supply chain management department
Questions
PDO’s scope of improvement in Supply Chain Management
1. How does the supply chain management of PDO works in macro level observation?
2. Which project did you work in PDO?
3. What are the challenges faced by PDO in the initial level of supply chain?
4. How does the optimisation process look like in micro level view?
5. What kind of requirement is needed to follow in the management process?
6. Is there any involvement of technology involved at the initial level? If yes, then what
is the method of involving information technology in supply management?
7. Do PDO have its supply chain or it takes help from the other logistic company?
8. What are the methods of integration of different process involved at the initial level
stages of supply?
Page 45 of 50

Appendix 2
Interview 2
Interviewee: Managers of Supply Chain Management of PDO
Questions
1. What the optimisation steps are of involved in the supply chain management?
2. Why the optimisation is important? How does it affect the revenue generation?
3. What are the challenges faced in the management process?
4. What are the measures taken to solve the challenges?
5. How the demand forecasting has been done?
6. What are PDO’s strategies of optimisation?
7. Is training on technological up gradation in supply chain management is given to the
employee of PDO? If yes, then how is the process designed?
Page 46 of 50

Appendix 3
Interview 3
Interviewee: Service Delivery Manager of supply chain at PDO
Questions
1. How does downstream supply chain look like in PDO?
2. What are the steps involved in the logistic process?
3. What are the main functions of the delivery team?
4. According to you how supply chain optimisation work under pressure or the superfast
delivery case?
5. How technology helped in the development of the supply chain?
6. How did the marketing team strategise their plan with the help of the delivery team?
7. What are the risks associated with the delivery service of PDO? How to overcome
those challenges at present as well as in future?
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