Q1.

Summarize the different transportation modes of petroleum and petroleum products

given comparative costs and benefits.

Petroleum Logistics:
In petroleum logistics, various means of transport such as roads, railroads, pipelines, and
marine vessels and ships are used to efficiently, quickly and safely transport petroleum and
deliver it to consumption areas in a timely manner.
Logistics is understood in various terms by the industry.
 It is detailed organizing and implementation of a complex operation.
 Logistics management is flow of goods between the point of origin to point of
consumption in order to meet the requirements.
 Logistics is overall management of the way resources are obtained, stored and moved
to locations.
 Planning, execution and control of procurement and positioning of materials is
logistics.
 The term refers to how various items are acquired, transported, stored and distributed
along the supply chain.

Sea Ports
 Ports are an important part of the logistics of the oil sector. Crude oil imports end here
and are used for transportation to refineries. Some ports also process domestic crude oil
from offshore fields.
 Port terminals receive and store imported products and ship them via pipelines or other
means to inland and demand centres. We obtain our products from coastal mobile
refineries.
 Jetties, SPMs, tankages, dock lines, manifolds, firefighting/pollution control facilities
etc. exist for petroleum handling at the ports.
 Ports are outlet for loading of export tankers.
 About 95% of India's trade volume and 70% of value is by sea.
India has 12 major ports and 205 notified small and medium ports. Six new megaports
are being developed in the country as part of the Sagarmala National Perspective Plan.
India is her 16th largest sea country in the world, with about 7,517 km of coastline.
government. Allowing up to 100% Foreign Direct Investment (FDI) under automatic
route for port and harbor construction. He also grants a 10-year tax exemption to
companies that develop, maintain and operate ports, inland waterways and inland
harbors.
 India's major ports had a throughput capacity of 1,534.91 Million Tons Per Year
(MTPA) in FY2020. In FY2021, all major ports in India handled her 672.6 million tons
(MT) of cargo traffic.
 Merchandise exports in 2021 reached $290.63 billion.
The government has taken several steps to improve operational efficiency through
mechanization, deepening drafts, and rapid evacuation.
 Growth in investment and freight traffic points to a healthy outlook for the Indian ports
sector. Providers of services such as operations and maintenance (O&M), pilotage,
accommodation, and shipping commodities such as barges and dredgers benefit from
these investments.
Port capacity growth is expected to grow at a CAGR of 5-6% to 2022, with a capacity
increase of 275-325 MT.
Inland transportation has proven to be a cost-effective and environmentally friendly
mode of transportation. The government aims to open 23 waterways by 2030. As part of
the Sagarmala project, more than 574 projects will be implemented between 2015 and
2035 with a scale of Rs 6 crore (US$82 billion).

India's freight traffic handled by ports is expected to reach 1.695 billion tonnes by 2021-
2022, according to a report by the National Transport Development Policy Board.
 Petroleum Handling Ports In INDIA:
Crude Oil - Draft restrictions prevent full or large tankers from mooring at the harbor
breakwaters and require Single Point Mooring (SPM).
Vadinar, Sikka, Mundra – These ports in Gujarat are close to each other and have
SPMs to handle VLCC/other vessels carrying crude oil.
Both Vadinar and Mundra have pipeline-connected storage terminals feeding crude
oil to the Panipat, Mathura, Koyali, Bina and Bathinda refineries.
Sikka has a crude storage terminal at the port, from where via local pipelines he will
be transferred to both units of the Jamnagar refinery.
Mumbai/JNPT – Both Mumbai High (pipeline network) and imported crude oil are
processed in his BPCL and HPC refineries. No SPMs. Fully loaded tankers are
lightened before mooring.

Crude Oil Transportation by Tankers

 Sea freight is a safe and economical method that allows you to transport large quantities
of goods to destinations around the world.
 It is an integral part of the petroleum supply chain and plays a key role in the movement
of goods between producers and consumers. Maritime trade accounts for about 90% of
the world's trade volume. The largest international trade is carried out by sea transport.
 Crude oil is shipped from oil fields and depots to refineries. From the refinery/port, the
product is transported by tanker to the point of demand.
Crude oil is estimated to account for 38% and petroleum products 10% of global
seaborne trade. An oil tanker is a commercial marine vessel for the bulk transportation
of petroleum.
 Dedicated pipelines motorized remote control valves, manifolds, high-capacity pumps,
heating arrangements, air tight compartments etc. are suitably provided for receiving oil
from shore at the load port and pumping out at the discharge port.
 Clean Tankers - These vessels carry 'white oils' such as gasoline, naphtha, diesel,
aviation fuel and kerosene. These products are called "clean" because they are light,
clear and transparent. When unloading, such products usually do not stick to the walls of
the load tanker. Dirty Tankers - These vessels carry 'black oils' such as crude oil, blast
furnace oil and LSHS. These oils are dark, heavy, and opaque, hence the name 'Dirty'.
When drained, these oils tend to stick to the tank walls. The container can be heated for
smooth handling of highly viscous products. Others are gas carrier, chemical carriers
etc.

Tanker Chartering
 The commercial activity of engaging or hiring a ship is called chartering. This is an
agreement between the ship owner and the user desiring to hire the ship.
 The hiring party is called ‘the charterer’ and other party ‘the owner’.
 VOYAGE CHARTER: Used to charter a vessel to make a voyage between a port of
loading and a port carrying an agreed amount of cargo.
 BAREBOAT CHARTER - It is hiring of the ship without crew for a specific period of
time. The vessel owner hands over the ‘bare ship’ to the charterer at the agreed port on
the agreed date.

Railroad / Tank Trucks

 Historically, railroads were the primary mode of transport for oil but today railways
compete with pipeline.
 Although typically more expensive than existing pipelines, rail infrastructure creates
more flexible alternative routes when pipelines are operational capacity. Many
petroleum products are transported from refineries to the market by tank truck or rail.
 Tank truck. Tank trucks deliver gasoline to gas stations and kerosene to homes.
In India, he 40% of refined products and crude oil is transported by rail, 30% by
pipeline, 12% by coastal tankers and 18% by road.
 Although oil transportation by rail has shown advantages in terms of efficiently
transporting oil from production areas to market centers, it also raises major concerns
about transport safety and potential environmental impacts.
The latest available data show that rail consistently emits less oil per ton-mile
transported than other land transport modes. Nonetheless, safety and environmental
concerns continue to challenge the transportation of crude oil by rail across North
America, including the devastating fires that claimed many lives and destroyed much of
Quebec's Lake Mégantic in 2013.
 The Economics of Oil by Rail: In the short term, the rapid expansion of oil production at
Bakken (production levels increased ten-fold between 2005 and 2014) has put pressure
on existing pipelines and refinery capacity to process the oil.
 • It is difficult to find willing buyers and prices are cheap compared to other crudes
traded in the US market. Since Bakken crude oil sells for about $4 to $28 less per barrel
 than West Texas Intermediate (WTI) crude, the benchmark price for U.S. crude oil
grades, the cost of rail transport is probably lower than that of pipelines i.e. $5 to $10
more per barrel.

Pipelines
 Oil logistics in India relies on pipelines to move products from refineries and ports to
inland branches, terminals and depots.
 All major downstream oil companies own and operate crude oil and refined product
pipelines.
 Primarily, it is the product pipeline that forms an extensive network that enables the
smooth flow of required quantities of specific products to meet domestic demand.
 Since this is a closed continuous oil transport pipeline, it is kept constantly product
filled and pressurized to minimize interfacial formation in multi-product pipelines.
 Product is fed in at one end of the pipeline and is discharged at the other end or
intermediate stations.
 Pipelines are the lifelines of petroleum supply chain. It is a preferred mode because of
following major factors:  Environment friendly  Safe  Cost effective  Energy
efficient  Reliable  Minimum Product loss  Controllable
 Globally pipelines provide a vast network spread across difficult terrains and sometimes
traversing through national and even several international borders.
 Local pipelines can be used for the following operations:
 Transfer of product from the refinery to local oil plants adjacent to the refinery. For
such refinery transfers, the eligible transaction amount is based on the receiving tank
dip. However, for transfers from Distributor facilities, the dip in the shipping tank is the
basis.
 Local pipelines can be used for loading and unloading tankers at ports and for direct
sales to large customers with their own storage facilities.
 Regional crude oil pipelines are dedicated and used at port locations entering coastal
refineries.
 Our local pipeline of dedicated products continues to run at the same quality.
 Local flush lines are filled with water used for multi-zone applications.
 Many pipelines have invested in automating their batch cutting process to reduce the
amount of transmix produced. By optimizing the timing of batch cuts through
automation, the amount of product sent to the transmix tank can be reduced. An
important part of the automation process is the integration of online analyzers. Use an
online analyzer to detect in real-time when the product-to-product interface has moved
to the transmix tank. Any unique parameter between products can be used to make this
determination.
 It is used for specific gravity. When products have different densities on both sides of
the interface, precise cuts can be made, minimizing the amount of transmix or
downgrade product produced, leading to significant cost savings.
India is one of the fastest growing large economies in the world with a GDP growth rate of
7.3% in 2018-19 and ports play an important role in the overall economic development of the
country. Approximately 95 % of India’s merchandise trade (by volume) passes through sea
ports. Many ports in India are evolving into specialized centres of economic activities and
services and are vital to sustain future economic growth of the country such as JNPT, Mundra
Port, Sikka Port, Hazira Port etc.
However, Indian ports still have to address infrastructural and operational challenges before
they graduate to the next level. For example, operational efficiency of Indian ports has
improved over the years but still lags behind the global average. Turnaround time (TAT) at
major ports was approximately 2.5 days in 2018-19, whereas global average benchmark is 1-
2 days. Some of the private sector ports in India like Mundra and Gangavaram, have been
able to achieve a turnaround time of around 2 days.
Secondly, last mile connectivity to the ports is one of the major constraints in smooth
movement of cargo to/from the hinterland. Around 87% of Indian freight uses either road or
rail for transportation of goods. A significant share of this cargo experiences “idle time”
during its transit to the ports due to capacity constraints on highways and railway lines
connecting ports to production and consumption centres. Although water-borne transport is
much safer, cheaper and cleaner, compared to other modes of transportation, it accounts for
less than 6% of India’s modal split. By comparison, coastal and inland water transportation
contribute to 47% of China’s freight modal mix, while in Japan and US, this share is 34% and
12.4% respectively. Significant savings can be achieved by shifting movement of industrial
commodities like coal, iron ore, cement and steel to coastal and inland waterways.

Q2. Explain the technologies and digitization processes for petroleum supply chain.

Setting up a digital solution and making it work like magic isn't easy. The oil and gas sector
has many barriers to change that have caused the industry to lag behind others in digitizing its
supply chain. First, the industry's regulatory framework was not created with today's types of
data sharing in mind. Second, the industry ecosystem lacks data standardization and data
sharing. In the rush to get the first oil, speed is often prioritized over efficiency, resulting in
higher costs. Oil and gas companies are still a little hesitant about going digital, but the
benefits are becoming apparent in other sectors. Digitization represents a clear opportunity
for upstream companies and the entire oil and gas supply chain.
Artificial intelligence (AI)
A key benefit of AI lies in automating repetitive and time-consuming processes such as
supplier screening and prequalification. Offloading these tasks to intelligent automation
systems can save significant time and money. But it doesn't have to end there. Virtual
Personal Assistants and Cognitive Sourcing Advisors can also provide audit summaries and
make recommendations on qualified suppliers, performance and risk management. AI can
also take organizational decision-making to the next level by analysing historical data, known
points of failure, geological and seismic data, and other relevant information in seconds.
Big data and predictive analytics
The oil and gas industry are defined by complex and often challenging global supply chains.
Advanced data analytics help buyers collect, review, and act on vast amounts of data. This
has many potential benefits, from consistent supplier onboarding to addressing common
bottlenecks like poor inventory management and delayed shipments. Better use of data can
significantly speed up supplier profiling and onboarding. A supplier database that enables
procurement teams to quickly search companies and find the information they need. B. He
gathers all the information he needs, including pre-qualifications, compliance and financial
information, in one place. Achilles Insights goes one step further with advanced analytics on
real-time supply chain data.
Internet of Things (IoT)
Cloud computing and IoT are coming together to create a network of connected devices and
workers at every stage of the oil and gas supply chain. The two main benefits are remote
worker management and real-time monitoring of processes and equipment. For employees
spread out over large work areas, cloud computing can centrally coordinate work processes.
Similarly, site administrators have real-time visibility into all aspects of operations in a secure
and auditable manner.
Buyer's Challenge
While the benefits of digitization are clear for European oil and gas companies, this does not
guarantee that it will be easier for procurement teams to implement them. Even if you can get
enough budget and executive buy-in to figure out how to integrate the new solution with your
legacy system, going digital can still prove difficult. It is important that other industries
leverage the experience and know-how of years of applying Digital His solutions to their
supply chains. Sharing and learning best practices from within and outside the industry is
essential to overcoming them and realizing the potential benefits of digitalization.
crossindustry expertise helps us leverage best practices in procurement and supply chain
management around the world. The Joint Oil and Gas Europe Investigation will bring
Achilles JQS and his FPAL community together to enable buyers across Europe to work
together. For example, as many oil and gas companies transition to renewable energy, they
are looking to leverage the advanced expertise that UK and Norwegian operators have gained
through decades of work in the North Sea. Oil and gas are a global industry, yet it still relies
on local knowledge and expertise for the best results. That’s what our community is all about.
Digitization is a huge opportunity for the oil and gas industry.