Around 88 percent of oil refiners in the GCC region say lack of investment in digital technology poses a significant threat to improving margins and lowers their competitive advantage.
The figure came from a recent survey, which was conducted by Gulf Downstream Association (GDA) in collaboration with Boston Consulting Group (BCG).
“The study highlighted that 67 percent of GCC refiners hope that digital technologies will solve their top two challenges: reliability and product optimization,” said Audah Al-Ahmadi, Secretary General – GDA. “Additionally, 19 percent of respondents believe digital can improve knowledge retention, with cybersecurity (10 percent) and safety (4 percent) rounding out refiners’ expectations of digital to solve challenges.”
Despite industry-wide awareness of digital transformation in the refining sector, the lack of integrated digitalisation strategies, and a fear of the unknown are the two key barriers preventing digital adoption. Of these, investment in current digital applications is perceived as a challenge; with 50 percent of those surveyed stating a lack of proven technology is the largest challenge to investment, followed by difficulties in estimating a robust business case upfront (25 percent), and a lack of short term benefit (25 percent).
“Unlocking digital requires pinpointing the most important areas to apply digital technologies, and these are maintenance, operations, and production planning,” said Mirko Rubeis, Managing Director and Partner at BCG.
“The shift from being aware of digital use and piloting digital applications to industrialisation is slow in maintenance and operations, despite 20 percent of respondents expressing awareness of more than ten digital applications. In production planning and economics, only 12 percent are aware of more than ten applications that could enhance this aspect of their business,” he added.
Globally, the report highlighted that IOCs are pursuing digital in six key areas: advanced market-driven operations, next-gen planning and scheduling, asset management 4.0, safety and ﬁeld productivity, trading / commercial plant interface, and support functions excellence, according to Yousef Ali, Chairperson – GDA Industry Trends Technical Committee and Team Leader – Value Chain Optimization, KPC.
“Successful digital adoption in these fields globally is setting a precedent for regional oil companies to leverage future growth via digital,” he said.
Furthermore, Samuele Bellani, Deputy Chair – GDA Industry Trends Technical Committee and Principal at BCG noted that traditionally, many GCC refiners have taken a conservative approach when it comes to leveraging digital to enhance operational excellence.
“For regional oil companies to compete on the digital front, they will need to realize how to minimize their investment challenges by developing digital technologies in the areas of maintenance, operations, and production planning to reap the immediate benefits of applying digital to boost their business and their bottom line.”