Oil firms are embracing digital tech to drive operational efficiency

As economic growth and rising income levels continue to trigger demand for oil and gas in India, refiners are set to focus more on digital technology. According to a recent study by Accenture, although digital is not one of the top plant investment areas for refiners globally today, nearly two-thirds plan to increase investments in digital technology in the next three to five years.

The example of Indian Oil Corporation Ltd (IOCL) indicates that domestic companies are adopting digital technology for business innovation and operational efficiencies. The company’s strategic road map for IT and digital technologies has been designed to deliver five digital capabilities — customer experience, artificial intelligence (AI) and automation, real-time business, cross-enterprise collaboration and predictive insights.

“Digital technology offers tremendous scope for generating new business models, bringing in operational efficiency, targeting & identifying customers and opening new revenue streams at Indian Oil. We would soon be embarking on a mega CRM (customer relationship management) project for delivering next generation customer experiences through multi-channel access to our LPG and retail business lines,” says a spokesperson.

While refiners including private players refused to share figures of spends in digital technologies in recent years, the Accenture study showed 57 per cent of executives claiming that their current level of digital investment overall was more or significantly more than 12 months ago. In case of the state-owned IOCL, digital technology has also been extensively used to align its business with various welfare initiatives of the government such as LPG Pahal scheme for linking Aadhaar ID with bank accounts, cash-back for digitising payments at retail outlets, LPG booking and daily price change of petroleum products.

Smart terminals and vehicle tracking system are live examples of Indian Oil going digital. IOCL has an in-house team for designing mobile apps based on services-oriented architecture. While Fuel@IOC and Indane are its flagship mobile apps for retail and LPG customers, xSparsh and mPower are meant for dealers/distributors and sales force, and Parivahak for its transporters. Says Kalikrishna M, chief general manager, corporate communications, “Talks are in advanced stage with IoT (Internet of Things) ecosystems’ vendors for doing proof of concept for one of our refineries and a few marketing plants. Machine learning, cognitive computing and virtual reality for training are some of the technologies which are being tested at IOCL.”

IOCL is at the proof of concept stage for using industrial internet at its refineries, and believes its adoption to understand the material science and physics of oil and gas assets would yield IOCL good savings on maintenance and operation cost, as well as help with additional revenue generation. “Optimising assets including its utilisation, health monitoring, reliability, predictive maintenance and performance management, people and workforce safety are some of the benefits that can be accrued by adopting digital technologies in our refineries.”

Refinery profitability is measured in terms of gross refinery margin (GRM). And according to experts, there are potential savings in operation and maintenance cost on using industrial internet and digital technologies, thus improving the GRM. “Statistical modelling and analytics in supply chain, customer churn (retail, LPG, institutional business, aviation), spend management, crude optimisation and mix, forecasting, pricing, market segmentation and transportation networking under practice at Indian Oil refineries are poised to give excellent returns,” says the spokesperson.

Digital technology consists of analytics (big data), cybersecurity, mobility, interactivity (including social media networking), cloud, IoT and AI. According to Accenture, leading refiners will be the ones that fully exploit big data and analytics and increase focus on industrial cybersecurity measures. Commenting on their findings, Hari Shankaranarayanan, managing director, resources, Accenture, India, said, “Indian refiners have commenced their transformative journey into the ‘new’ and are embracing digital technologies. The common use cases across players include corrosion management, predictive asset maintenance, visual inspection leveraging drones and video analytics for safety.”

Data published by India Brand Equity Foundation show that in 2016, India had refining capacity of 230.06 million metric tonnes per annum and by this year it will reach 310 MMTPA. Public sector companies enjoy a share of over 60 per cent of the refining capacity. Within digital adoption, a PwC survey last year revealed that Indian firms are focusing more on investments in marketing and IT, and less on operations and customer experience compared to global players.

Kalpana Jain, senior director at Deloitte India, points out that the oil and gas industry in the country is driven by latest developments globally since it doesn’t cater to merely a domestic market. “The rate of adoption of digital is perhaps a bit slower (in India). But the need for digitisation is something that the industry has to recognise. Because with digital technology, it gives you real-time data and allows you to react in a more effective manner to any change in parameter or to monitoring what your productivity is or cost structures are.”

The only serious concern is around the area of data integrity, as most often the data of national oil companies are hosted on the cloud, she adds. “Companies would like to host the data on their own servers rather than on those which service providers offer.”

Tech benefits
  • Common use cases include corrosion management, predictive asset maintenance and video analytics for safety
  • Digital gives real-time data and allows firms to react better to any change in parameter
  • IOCL is using digital to align its business with welfare initiatives of the government

 


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