How Value Chain Optimization and Asset Performance Strategy unlocks value for operators to stay agile
AVEVA leads discussions on Forging resilience amidst uncertainty with Value Chain Optimization in an exclusive virtual round-table.
Digital Twins, dynamic supply chain and customer demands were all topics driving debate in an exclusive round table at the Asian Downstream Summit on Forging resilience amidst uncertainty: How Value Chain Optimization and Asset Performance Strategy unlocks value for Refining and Petrochemical operators to stay agile.
The virtual discussion was led by Wai Seng Cheah, Managing Director Malaysia and ASEAN Energy Digital Lead at Accenture, and took place as part of the flagship virtual edition of the Asian Downstream Summit and Asian Refining Technology Conference, which brought together international industry influencers and delegates from over 28 different countries to discuss the most critical issues facing the downstream industry today.
The first interactive executive round table of the event shed clarity on today’s uncertain times, as business leaders from AVEVA, PETRONAS, PTT Global Chemical Public Company, Brunei Energy Services & Trading Sdn Bhd and SCG came together to discuss how innovation can help streamline asset performance, enhance value optimisation, and build resilience amidst business uncertainty.
Connectivity for a critical climate
“Agility was always around the business in oil and gas…” explained Sebastien Ory, Vice President, South East Asia, AVEVA. Drawing from over 15 years of experience in Asian markets, for him the “key thing now is the paradigm is changing – it’s no longer good to have, it’s must have”.
Refiners know that with the COVID-19 pandemic and the drop in oil and gas prices connectivity is more critical than ever, not only within the business, but in addressing customers’ needs as well, with 56% of voters in an interactive poll claiming that adapting your plan and production schedule to market dynamics is the biggest operational challenge they face.
“Today’s market is challenging”, agreed Dr. Tuck Leong Chan, Lead Digital Accelerator at PETRONAS. “Volume and price are low”. For him, this has driven a need for “value chain optimisation… to grow more horizontally” to adapt to customer demands.
Process Department Manager at PETRONAS, Jefri Mokhtar, whose role has recently expanded to include implementation for digital solutions, added that as crude becomes more readily available and supply chains shift, digitalisation will become a business necessity.
“Refineries will turn to technology”, he confirmed, “to meet shifting customer demands”.
Bringing value to the bottom line
Another interactive poll revealed that 53% of the panel audience believes taking value chain optimisation process to the next level is the key way downstream operators can position themselves to thrive in the current environment. Some are already ahead of the curve. Ory shared that by not only integrating an end to end view of full supply chain in real time, but also using AI to run different maintenance and turnaround simulations, state-owned UAE oil giant ADNOC were able to save optimise efficiency by US $100 million. From an APAC perspective, Warit Krittaphol, Commercial Director of Chemicals Business at SCG, agrees. “(It costs) US $100 million every time we are forced to shut down”, he confirmed “We cannot solve this problem alone. (But) technology can help us manage our asset performance in a much better way”.
He noted that integration of data can help identify and solve potential problems faster, leading to quicker decision making and added business value. “We can gain insights 3 – 6 months earlier”, he shared with the panel. “Our goal is to improve reliability from 98% – 100%.
New horizons for Cloud
The panel agreed that one technological advancement that is driving change across the value chain is Cloud: a technology that, according to Ory, has the power to optimise planning up to “120 times faster…. saving… around the US $1 million per unit per year, purely and directly into the bottom line.”
Mokhtar agrees that Cloud is a key enabler, especially due to the greater need for agility during the pandemic.
“There’s a phrase ISBL – which means ‘inside battery limits’ – but we used to say it meant “inside someone’s bloody laptop” he joked. “Cloud computing is here to stay. Everyone has access to when the maintenance plan is going to be held, when a particular vessel or product is going to arrive. We’re working to make sure that data sharing is seamless: on the right platform and in a timely manner”
Yet digital innovation is not just about the latest shiny solution. Pitak Lausangngam, who heads digital transformation at PTT Global Chemical Public Company, is firm that “digital transformation starts with people, not tech”. When it comes to asset optimisation, your workforce should be your most important – and your most resilient – business asset. “We need to create a (sustainable) ecosystem” Lausangngam explained, “(in order for business resilience to thrive)”.
Breaking siloes, building connections
For Mokhtar, machine learning is helping employees adapt to the new normal of the pandemic as well as “maximising margins and minimising losses”, across both the upstream and downstream businesses. At PETRONAS, they are currently using predictive tools to analyse when equipment requires maintenance and heat exchangers need to be cleaned. The processes cuts down on operational costs and “works with social distancing too”.
Sophiaan Assoari, who works in risk management and trading at Brunei Energy Services & Trading Sdn Bhd, remarked that even in a socially distanced future, vertical integration and cross-department collaboration is key. “The future is going to be challenging”, he stated firmly. “We cannot be siloed”.
Ory agreed that now more than ever, business resilience – and survival – is about “getting collaboration throughout the company”. “It’s a major change of process, a major change of mindset”, he told the panel. “The ability to see the full horizontal value chain”
The value chains of the future
Value Chain Optimisation took first place in the final poll of the session, with 33% of the audience choosing it as the main area in which digital capabilities could add value to their organisation. Yet when discussing whether there is a risk the industry would become over-reliant on technology, Lausangngam reminded everyone that with the pace of the technological development, “we don’t know what we don’t know”.
“Senior execs ask what kind of technology to invest in over next five years”, he explained. “But when we were at university, we didn’t even know about YouTube! We don’t know what kind of technology will be around in the next 3 – 5 years!”
For Chan, it’s not just technology, but also the shift towards more sustainable fuel sources that is shaping value across the supply chain.
“We’re at an interesting point where the traditional source of energy is still needed, but globally there is a focus on what is sustainable”, he explained. “What is interesting is that this is driven by the demand of the customers. It will add complexity to the value chain. In the future, instead of just oil and gas and LNG, we could sell gigawatts. The more products in our portfolio, the more value chain becomes important.”
Jump firm and jump fast
Ory is also of the view that “in the next 20 years, the mix will become more and more important… between different sources of energy”. What exactly this mix is – and the new technologies that will evolve to drive it – may be uncertain, but one thing us for sure. In the words of the panel moderator, Cheah, “waiting and seeing is not an option. To be ready for a more de-carbonised and more customer driven future, the time is really now”.
When time is critical, and times are uncertain, forging resilience through agility is not just good for business, it is good business. And for Ory, it’s not just moving fast, but the direction you move in, that will define your future.
“If you’re agile as person, you jump, and you know where you’re landing and you’re landing firmly”, he pointed out. “It’s the same for business”.
It’s the operators who use data to drive their direction who will jump most confidently into the next normal.