FUELING
INNOVATION
TO WIN IN THE INDIAN
OIL AND GAS MARKET
Energizing oil and gas companies with
digital technologies to help them thrive
in a fiercely competitive market
1 | ABJI
ABJI 2019
2019
The oil and gas industry is sitting on a ticking time bomb—fueled by
geopolitics, supply and demand disruptions, fierce competition and
sustainability challenges. India, for instance, is the third-largest consumer
of oil, but heavy import dependency means that any global supply shocks
can have a significant impact on it. It’s also the world’s fastest-growing
energy market that is seeing intense competition as both Indian and global
players expand their retail presence. The threat of disruption from electric
vehicles also looms large as the Indian government resolves to promote such
vehicles. However, there are opportunities too—a US$50 billion investment
is expected over the next five years in the Indian oil and gas industry. So,
how can companies ride the wave of disruption and grow profitably?
SPARKING CHANGE
The winners will be those who can reinvent themselves by adopting new and
agile business models underpinned by digital. Those who use the power of
technology to differentiate themselves and find new ways to innovate and grow
will gain an edge. Across the oil and gas value chain, digital solutions now offer
companies everything from integrated views of operations to new platforms
that streamline processes, costs and organizational structures, making it easier
to gain the predictability, productivity and efficiency advantage.
Many companies are already investing in digital technologies to optimize
operations, rein in volatility, boost cash flow and turbocharge growth. As many
as 97 percent of upstream and 92 percent of downstream executives say
emerging technologies have helped accelerate innovation in their organization.1
A global survey also shows that leaders—the
top 20 percent oil and gas companies—have
already benefited from digital. Done right, digital
initiatives can improve EBITDA by up to 1 percent
(of revenues); cut capital expenditure by up to
20 percent and improve global cash flows by
US$300 billion by 2025.2
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Accenture’s proprietary framework provides a high-level overview of the key
digital interventions across the oil and gas value chain. The framework is based
on our global experience of working with oil and gas majors that have captured
significant value from such initiatives (see Figure 1).
Figure 1: It pays to go digital
(percentage figures represent cost savings across initiatives)
IMOM (Integrated Energy Management Pre-Heat Train
Manufacturing Analytics Heat Exchanger
Operations Mgmnt) Fouling Prediction
MANUFACTURING Digital TAR
REFINERY Blend Performance Remote Operation
30–32% Analytics Crude flex Center
Predictive Asset Yield/Quality HSSE
Maintenance (PAM) Optimization
Supply Chain Terminal Fleet Tracking &
INFRASTRUCTURE Control Tower Automation Optimization
DIGITAL
SUPPLY CHAIN IMM 2.0 Commercial
Optimization
26–27% PIPELINE
PIDS (Pipeline Pipeline LDS (Leak Corrosion Management
Intrusion Detection Detection System)
TRADING System) Intelligent Pipeline
Integrated Project AR/VR-driven Connected Men,
Controls & Analytics Work Methods Machines, Materials
CAPITAL
PROJECTS
Drone-based surveys Capital Projects Suite
FRIS (loyalty, Salesforce Analytics driven
NFR, pricing) automation nudges for cross-sell/
DIGITAL (NewsPage) upsell
CONSUMER FUEL RETAIL
FROP (Head office, Digital Unified B2C/B2B Pricing
28–29% LUBES/LPG Back office ops, CRM (Retail) Analytics
cloud POS)
As-a-Service Dynamic Pricing Online-to-outline
Ecosystem
Spend Analytics Cost Modeling Market Intelligence
PROCUREMENT
Payment Terms Inventory Bid Analytics
DIGITAL
Analytics Optimization
ENTERPRISE
10–12% FINANCE Predictive Cashflow Smart Reporting Accounting &
Fraud Analytics
Hiring & Retention Analytics Performance & Talent management
HR
Employee Engagement Learning & Qualification Analytics
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Here’s how digital can fuel innovation in the oil and gas industry.
FUELING
EFFICIENCY IN
UPSTREAM
For the upstream sector, cutting costs and improving recovery rates are key
priorities. In India, oil exploration companies must contend with scarce oil reserves,
exacerbated by inefficiency in oil production. Also, lack of coordination between
multiple contractors in managing capital projects leads to major project delays.
Digital solutions offer some serious benefits.
Advanced solutions such as Digital Asset Maintenance and Production Surveillance
are helping increase efficiency in oil extraction and minimize downtime through
predictive maintenance. The Exploration Advisor is enabling a private oil and gas
major and a leading state-run oil and gas company to enhance the probability of
success in exploration—by better analyzing massive amounts of exploration data.
The Digital Capital Projects Platform is shortening project timeframes by 10–15
percent through seamless coordination and alignment across multiple contractors.
EXTRACTING
HIGHER
VALUE FROM
REFINING
India’s refining sector is looking at a US$30 billion opportunity from capital
project investments over the next three years. However, time overruns in such
projects can go up to 50 percent and cost overruns by 20–40 percent.
Digital solutions such as predictive alerts, video analytics, interactive
dashboards and integration tools now provide companies clearer visibility into
projects, and help detect problems early on and take quick action. The benefits?
A 10–15 percent improvement in project schedules, a 5–10 percent increase in
asset productivity and more than 5 percent reduction in cost.
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Think refining in the New, think “real-time gross
refining margin (GRM) optimization.” This is
where advanced analytics comes in. It can help
unlock value of up to US$2 billion in GRM/barrel
by optimizing all aspects of refinery operations—
from core operations and maintenance to
demand management and crude procurement.
In India, most refining companies are setting
up petrochemical plants next to their refineries
to boost profitability. Digital can help not just
optimize existing refineries, but also achieve
better integration with new petrochemical units.
The MOM X.0 digital platform allows
integration of up to 20 digital initiatives,
including asset and process optimization,
safety, connected workers, heat exchanger
fouling prediction and digital twin refinery.
The result? Companies can realize up to
US$1.5 per barrel.
In lubes, players need to address the growing demand and optimize costs while
future-proofing their business in a fierce market. They will gain from reducing raw
materials, which account for more than two-thirds of the total manufacturing cost.
High-end analytics models can help achieve this by optimizing the use of base
oil and additives, reducing tolerance limits in manufacturing blending plants and
improving the bottom line. Also, access to real-time data can help companies
dramatically reduce high inventory and logistics costs.
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Advanced analytics modeling is helping a leading global lubricants player improve
visibility into its B2C supply chain and reduce the working capital requirement
of distributors in India. With insights into the market potential of each of the 400
districts in India, the company can plan its sales and marketing activities better. The
company is also enhancing its salesforce effectiveness with AI solutions such as
NewsPage. In effect, it is moving to a new business model—of selling services along
with lubricants. Digital tools have also helped the company optimize the warehouse
network, reducing logistics costs by 8–10 percent.
DIGITALLY
POWERED
CONSUMER-
CENTRIC
MARKETING
In retail, digital solutions are enabling companies to improve operational efficiencies,
elevate the customer experience and win market share. For instance, the Fuel Retail
Operations Platform and the Fuel Retail Insight Solution are giving a state-run oil and
gas company the competitive edge with actionable, near real-time micro-market field-
level insights into not just its entire operations, but also the overall retail business.
MIDSTREAM
MANAGEMENT
In midstream, the primary challenge facing industry players is corrosion
management. Companies are leveraging advanced techniques and digital tools
to tackle the problem. Global oil and gas majors, particularly in the United States,
Europe and Southeast Asia, have successfully embraced digital for integrated
pipeline management. Such solutions can easily be leveraged in India.
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AN
ELECTRIC
BOOST
Globally, the electric vehicle market is growing at a rapid pace. The Indian
government’s vision is electrification of all public transport and new cars
by 2030.3 To realize this, the government will need to move beyond providing
subsidies to auto makers and consumers purchasing electric vehicles, and
focus on building an enabling ecosystem. Digital technologies are already
helping create new business models for electric vehicles. For instance, battery
swapping, charging infrastructure management and fleet management models.
Digital shows immense potential to empower oil and gas companies to
pursue new innovations and growth at speed and scale. But, to truly seize the
opportunities digital offers, companies need to take a more comprehensive
approach. Setting up a digital Center of Excellence (CoE) to drive maximum
value from related initiatives must be part of their digital transformation journey.
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DIGITAL CoE:
EXTRACTING
MAXIMUM
M LEAGE
Oil and gas companies need a central organization
that reports to the CEO and focuses on:
VALUE
REALIZATION
Identify large business VALUE
problems that digital can solve SUSTENANCE
Track value and
profitability being
generated by digital,
keeping sustainability
in mind
VALUE
IDENTIFICATION VALUE
CONSOLIDATION
Keep a close watch on digital
trends that can help create Consolidate digital-specific
greater business value capabilities so that the right talent
and resources can be leveraged
across the organization as and when
required
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AGILITY
STARTS HERE
Accenture recommends that oil and gas companies in India must act on these five
imperatives to achieve digital’s full value:
FEW INNOVATIONS VERSUS SEVERAL PILOTS
Instead of undertaking several digital initiatives, pick a handful across all
aspects of the business. Technology will keep changing, but companies
need to place their bets.
RETHINK. REDEFINE. REDESIGN.
When considering digital technologies for any stage—exploration,
development, production, midstream, refining or marketing—be clear about
the desired future state, constraints and opportunities.
MAKE CHANGE STICK
Couple digital investments with investments in people and culture.
Invest in tools and training to create an environment of collaboration
and experimentation.
RUN LEAN. THINK BIG.
Embrace analytics to understand how causal relationships influence
decision making and organizational agility. Establish small teams that can
work at speed to drive digital.
LEADER VERSUS FAST FOLLOWER
Closely monitor the market. Be flexible and learn from failures and
successes of other companies.
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TECH TRENDS
Indian companies must keep an eye out for global trends and shift gears with
the changing market dynamics. The Accenture Technology Vision for Energy
2019 survey of 168 global oil and gas companies identified five technology
trends that energy players must focus on to lead the next phase of innovation
in what we call the “post-digital” future.
DARQ POWER
Companies must harness the power of DARQ—distributed ledger
technology, AI, extended reality and quantum computing—to reimagine the
entire energy industry and its role in the world.
GET TO KNOW ME
Tech-driven interactions create a digital identity for every energy customer—
key to understanding the next generation of consumers and delivering
individualized, experience-based relationships.
HUMAN+ WORKER
Workforces are becoming Human+ with workers empowered by their skills
plus a new set of tech-driven capabilities. Energy companies must adapt
technology strategies to support this future workforce.
SECURE US TO SECURE ME
Ecosystem-driven business connections increase the exposure to risks.
Organizations must rethink their approaches to security in a way that
defends not just themselves, but also their ecosystems.
MYMARKETS
Technology is creating a world of intensely customized and on-demand
experiences, and energy companies must reinvent their organizations to
find and capture those opportunities as they come.
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In the post-digital era, companies will face massive pressure as customers,
employees and society make their demands known. But it will also provide
tremendous opportunities for companies that can deliver the appropriate
experience at just the right time. Investing in the digital ecosystems of the
future and the next wave of emerging technologies will give them a good
start in capturing those opportunities.
The time to act is now.
AUTHORS
SANDEEP DUTTA PIYUSH PATEL GAURAV MODA
Managing Director & Managing Director & Managing Director
Lead – Resources Global MOM/MES Lead – Accenture Strategy
Accenture in India Production & Supply Chain Accenture in India
Resources Industry X.0
Accenture
REFERENCES
1. https://www.accenture.com/us-en/insights/energy/accenture-technology-vision-energy-2019
2. https://www.accenture.com/us-en/insights/strategy/oil-gas-digital-agility?
3. https://www.thehindubusinessline.com/opinion/editorial/shifting-gears/article26488089.ece
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