GROUP 2 | CAPSTONE I (CP-12454)

BLOCK CHAIN TECHNOLOGY, SUPPLY

CHAIN INTEGRATION, SUPPLY CHAIN
RESILIENCE – OIL & GAS SECTOR
Presented by: HIBA RASHID 26898; Bilal Shakir (26831), Saeed Ahmed (26953),
Muhammad Owais Siddiqui (26952) & Urooba Iqbal Kasbati (28600)
 CONTENT
CHAPTER 1
 About BCT
 Potential of BCT
 How BCT will transform O&G sector
CHAPTER 2
 Profiling of the O&G sector
CHAPTER 3
 Supply chain Resilience
 Supply chain Integration
 Relationship of SCR with BCT
 Relationship of SCI with BCT
 Argument of the study
CHAPTER 4
 Methodology
CHAPTER 1

A. About BCT

OVERVIEW OF 

Agents involved
How block chain works?

BLOCK CHAIN
B. Potential of BCT
C. How BCT will transform O&G sector

TECHNOLOGY
 Upstream
 Midstream
 Downstream
  A technology that permits:

BLOCK CHAIN  Transaction to be gathered into blocks and recorded

 Allow the resulting ledgers to be accessed by different servers.

TECHNOLOGY
 also known as Distributed Ledger Technology (DLT )
 Agents involved: Public key, Private key, Block, Node, Hash, Cryptographic
algorithm, Consensus mechanism & Public v/s Permissioned
 Centralized Ledger
 There are multiple ledgers, but Bank holds the "golden
record“
 Client B must reconcile its own ledger against that of
Bank, and must convince Bank of the "true state" of the
Bank ledger if discrepancies arise
WHAT IS A DISTRIBUTED LEDGER?
Distributed Ledger
 There is one ledger. All Nodes have some level of access to
that ledger.
 All Nodes agree to a protocol that determines the "true
state" of the ledger at any point in time. The application of
this protocol is sometimes called "achieving consensus."
 HOW BLOCK CHAIN WORKS?
Video link: https://youtu.be/WiRFuHXHBhk

Trust | Decentralization | Tamper-Proof Quality

Cannot be corrupted | Enhanced Security | Consensus

POTENTIAL OF BLOCK CHAIN

 HOW BLOCK CHAIN WILL
In the Upstream Chain, the potential for disruption using

blockchain is in areas related to

TRANSFORM O&G SECTOR

 Supply chain transparency

 Smart Contracts for Performance based contracts

(UP-STREAM)?
 Land Rights on the Blockchain

 Financial Reconciliation
 The Midstream sector has a lot to benefit from blockchain

HOW BLOCK CHAIN WILL technology in the following ways:

 Multi-Transportation Product Tracking

TRANSFORM O&G SECTOR  Industrial Infrastructure Maintenance

 Hazardous Location Equipment Testing

(MID-STREAM)?
 Environmental Disaster Response & Mitigation
 Carbon Trading
 IoT Integration
 HOW BLOCK CHAIN WILL
Blockchain technology excels at maximizing large-scale, multi-

product coordination of downstream in the following ways

TRANSFORM O&G SECTOR

 Multi-Product Supply Chain Tracking

 Petroleum Products — Quality Control

(DOWN-STREAM)?
 Corruption & Regulatory Clarity

 Streamlining of Automated Payments

CHAPTER 2

A. UP-STREAM
 Sector structure
 Domestic Resources
 Pakistan Offshore

PROFILING  Unconventional Resources

B. MID-STREAM

OF THE O&G 

Oil Midstream Infrastructure
Gas Midstream Infrastructure
C. DOWN-STREAM

SECTOR 

Sector structure
Oil Refineries
 Oil Marketing Companies
 Gas Market
 UP-STREAM
 OVERVIEW
 Pakistan's E&P sector consists of a variety of national and
multinational companies (24 operational companies as of June
2019).

 OGDCL – country's largest E&P organization, accounting for 45.3

% and 29.2 % yearly oil and gas output, respectively. MOL is
then second-largest oil producer, with a 24% output share. PPL, is
the Pakistan's second-largest producer of gas, with a 19.3 %
output share. MOL, Eni, UEP & MPCL are among the other
important corporations
 CONTINUED…
 DOMESTIC RESOURCES:
 Approx 96% of the nation's exploratory wells drilled in 2 basins: the "Kohat & Potwar Basin" & the "Lower & Middle Indus Basin.
 Unexplored areas – Suleiman and Kirthar Foldbelts”
 Other regions with less exploration activities – “Middle Indus Basin” in the Punjab Platform.
 Exploration sites in the upstream region: Kohat-Potwar Basin, Punjab Platform Basin, Lower Indus / Middle Indus Basin, Kirthar
Foldbelt, Sulaiman Foldbelt, Balochistan Basin, Indus Offshore Basin & Makran Offshore Basin
 PAKISTAN OFFSHORE:
 The Pakistan Offshore – Makran & Indus basins.
 The Indus basin covers the region of greater than 250,000 km2 with 18 exploration wells are drilled so far.
 The Makran basin covers the region of greater than 8,883 km.
 UNCONVENTIONAL RESOURCES:
 Unconventional resources involves: Shale gas/oil & Tight gas/oil.
 They are managed by the Directorate General of Petroleum Concessions
 As per findings of E&P firms – an estimated tight gas potential as 35-40 TCF is in the Middle – Lower Indus Basin.
 The Lower Indus basin – a habitat to shale deposits now.
 Pakistan has 105 TCF of theoretically recoverable reserves of shale gas.
 Furthermore, shale oil deposits of about 9 billion barrels are predicted to exist in southern Pakistan.
 MID-STREAM
 OIL MID-STREAM INFRASTRUCTURE
 In the midstream, the majority of Pakistan's 19.22 million
tonnes of petroleum products are carried via road, oil pipelines,
and railroads
 GAS MID-STREAM INFRASTRUCTURE
 Two monopolies, SNGPL and SSGCL, dominate the midstream
gas industry.
 Punjab and KPK are served by SNGPL, whereas Sindh and
Balochistan are served by SSGCL
 The two LNG ports are at PQA, Karachi, in Sind's southern
region.
 Engro Elengy Terminals is in charge of the first terminal, while
Gasport Limited is in charge of the second.
 The combined capacity of both terminals is 1,200 MMCFD. By
2021, a third LNG facility is planned to be operational
 DOWN-STREAM
 OIL DOWNSTREAM  GAS DOWNSTREAM
 Six oil refining firms (ARL, PARCO, PRL, BYCO, Enar & NRL) and  Two government-controlled utilities, SSGC and SNGPL,
30 oil marketing companies make up the oil downstream industry. distribute gas to the majority of the nation
 PSO – country's largest OMC.
 PAPCO and ISGS are the two oil pipeline businesses in the nation.
 The OMCs are in charge of oil storage, while there are two oil
terminals in the nation, managed by KPT & FOTCO, and one SPM
operated by Byco.

 OIL REFINERIES
 There are six refineries in Pakistan: Byco
Petroleum, PRL, ARL, Parco, NRL and ENAR
Petrotech are among the refineries
 Refer to table LHS for capacities.
 CONTINUED…
 OIL REFINERY MARKET
 Parco - 31% share of the refinery market, followed by Byco
Petroleum Pakistan – 19%, ARL – 18%, PRL – 12% and NRL –
17%.
 With 4.7 MMT, HSD – widely produced petroleum product,
followed by furnace oil at 2.8 MMT and motor gasoline at 2.3
MMT.

 OIL MARKETING COMPANIES

 There are now 30 oil marketing companies in Pakistan. (both
public and private entities).
 PSO, a state-owned corporation, holds a 50% stake of the
petroleum market.
 Hascol Pakistan Ltd, with a 12% stake, is the largest private oil
marketing firm in Pakistan.
CHAPTER 3

A. Supply chain Resilience

LITERATURE
B. Supply chain Integration

C. Relationship of SCR with BCT

REVIEW D. Relationship of SCI with BCT

E. Argument of the study

 SUPPLY CHAIN RESILIENCE
 Commonly regarded as an important aspect of risk management in supply chain.
 System and it’s potential to recover to its original condition or shift to a new, better positive
outcome after being disrupted
 Other researchers have contributed explanations of SCR, as listed in figure below:
Christopher & Peck Juttner & Maklan
Good knowledge about the supply
chain network implementing reshaping 01 Flexible
practices

Applying a collaborative supplier base

strategy based on information sharing 02 Rapidity

Build and maintain supply chain that is

agile so it has a capacity to respond 03 Visibility
quickly to market changes

Introducing a supply chain risk

management culture 04 Collaboration

agility, availability, efficiency, flexibility, redundancy, velocity, and visibility, in this initial approach
were treated as secondary factors
 SUPPLY CHAIN INTEGRATION
 A process where all the parties involved with the
fulfilment of a product are integrated into a single system
 Best way to get a competitive edge.
 The higher the degree of integration between suppliers
and consumers in the supply network, the bigger the
advantages.
 Stevens had been a leader in the field of integration
studies. According to him, supply chain integration has 4
stages:
I. Internal Integration
II. Supplier Integration
III. Customer Integration
IV. Information Integration
 CONTINUED…
Internal Integration
deliberate and planned aligning of business operations within
an organization

Supplier Integration
Vendors are engaged in the firm’s critical decisions methods
and data about demand predictions, production and level of
inventory is exchanged.

Customer Integration
Overview of the requirements and their specific needs giving
them the advantage of serving them better

Information Integration
It requires the inputs and role playing of people, technological
systems to originate, sort, process, and disperse information to
the designated location at the right time for effectual decision
making process
 RELATIONSHIP BETWEEN BLOCKCHAIN TECHNOLOGY
& SUPPLY CHAIN RESILIENCE
 Often cross the business functions and borders to build an extensive network of business
partners
 Use BT to improve supply chain resilience from a security perspective
 Therefore, you can mitigate the risks associated with intermediate interventions
 Such as hacks, privacy breaches, vulnerabilities to political instability, costly regulatory
compliance, financial institution instability, and contractual disputes.
 To mitigate these vulnerabilities, supply chain experts need to identify potential weak links in
and assess their level of risk
 CONTINUED…
 Identify trading or supply chain partners
 Create a supply chain or process map .
 Classify and evaluate weaknesses
 Implement a system to manage and monitor risk mitigation efforts
 Creating an action plan or emergency response plan for risk reduction.
 Ensuring Data Protection Supplier
 The Road to Paper to Digitization
 Prevents the occurrence of risks.
 Reduce the impact of supply chain disruption
 Increases flexibility in dealing with supply chain disruptions
 RELATIONSHIP BETWEEN BLOCKCHAIN TECHNOLOGY
& SUPPLY CHAIN INTEGRATION
 Market conditions are becoming more dynamic and demanding, the supply chain relies increasingly on
collaboration, integration, flexibility, and trust between stakeholders
 BT digitally integrates multiple stakeholders to facilitate supply chains with the benefits of enables SCI's
hyper-level integration of customer, supplier, and customer information
 The SCI provided by BT is highly protected and prevents unauthorized access to the information stored in
your ledger.
 BT successfully address a crisis when a product is recalled.
 For instance, Producer A and Supermarket B. After the trading conditions of are met, the contract is created,
coded and "stored" in the block chain structure. The contract is triggered when the terms of negotiation are
met. After that, the money and goods will be transferred according to the contract.
 Therefore, not only does it speed up transactions, but it also helps reduce costs and improve reliability
because every participant (node or actor) in the network has a copy of the ledger.
 This SC transparency enhances customer satisfaction and guides the enterprise by providing quality
feedback, increasing sales and creating more effective initiatives
 ARGUMENT OF THE STUDY
 There are two major challenges that needs to be addressed in the Oil & Gas sector of Pakistan:
Supply chain Integration & Supply chain Resilience.
 Block chain can resolve the challenges through its applications.
 This will improve the supply chain practices of the companies and thus their operational
performance will be enhanced overtime
CHAPTER 4

A. Case study method: Phenomenology:

METHODOLOGY
qualitative research based on live
experiences
B. Interview Protocols
 METHODOLOGY
 We have adopted Narrative Method .
 We will conduct interviews of different experts having oil and gas sector background.
 For this purpose we have designed interview protocol to collect the desired information about:
 Supply chain Integration
 Supply chain Resilience
 Block chain technology in oil and gas sector
CHAPTER 5

FIRST COMPANY VISIT:

BYCO OIL PAKISTAN LIMITED
I. REFINERY BUSINESS & STRUCTURE
 Crude oil is initially imported & transferred to SPM facility via ship
 Crude oil transferred to tanks located at facility
 Operations then performed and various products are made via crude oil

II. SUPPLY CHAIN CHALLENGES AND INTEGRATION

 Need to install various add-ons in the SAP module for the ease of operations
 Issue in tracking of bills for payments

III. SUPPLY CHAIN CHALLENGES AND RESILIENCE

 Resilience of the company depends on the intensity of the challenge
 Any issue in the O&G sector must be resolved in 20 days
 During pandemic, no demand so no resilience
CHAPTER 6

SECOND COMPANY VISIT

PERSONNEL INTRODUCTION
Scheduled an interview with the several representatives from oil and gas sector including GM
commercial, planning manager, sourcing manager, & international contracts manager

I. DOES REFINERY IMPORT FINAL PRODUCTS?

 It happens with finished products like petroleum which is then imported by the marketing
company because there is a limit of 20,000 tons for refineries. So, DG oil regulates that if there
exists a high demand generally in seasons of increased traveling or food transportation, so one
can import.
 Charge a premium based n immediate delivery or based on availability. The premium can vary
based on the month you are importing

II. WHAT IS THE CAPACITY UTILIZATION OF THE REFINERY? AN

ANNUAL AVERAGE CAPACITY?
 We are operating at 60%-70%
 We don’t have such option of not making furnace oil. If we had such options, things would be much
easier then
III. CAN WE MINIMIZE THE PRODUCTION OF FURNACE OIL DURING
REFINING PROCESS?
 It is not possible to minimize the production of furnace oil during the refining process
 Refinery is designed for a Specific crude oil which has specific % of fractions.
 It is impossible to decrease one product while maximizing another, if refinery at full capacity, it
will have more furnace oil

IV. WHAT ARE THE OPTIONS AND AVAILABLE MARKET IN TERMS OF

EXPORTING THE FURNACE OIL?
 In Pakistan we don’t have tangible development to export furnace oil.
 Furnace oil is thick product so it is difficult to get the desired and study flow easily specially in
winter season.
 In local market we are sailing furnace oil in low price as compare to purchasing cost
V. HOW REFINERIES OBTAIN THE BENEFIT OF PRICE DOWN?
 Our refineries are designed for some specific crude.
 In COVID, firm Y was the only refinery that remained operational, while the other refineries were
shut down owing to product shortages.
 Furthermore, company Y purchased crude from a local vendor from an oil-producing country and
they took advantage at that time when crude oil prices down
 A case in which company X received an apology letter issued by HARAM CO. they said we are not
in a position to give u the crude as committed on that month, so at that time NRL down

VI. WHAT DO YOU THINK OF THE CURRENT IT INFRASTRUCTURE AND

WHAT FUTURE DOES THE IT HAVE IN THIS SECTOR? IS THERE ANY
ROOM FOR IMPROVEMENT?
 The use of technology is not adequate and hence the process takes longer than it should
 It can provide us a forecasting tool in normal operation and help us anticipate the next need of
gasoline
 Centralized portal for some commodities can help evaluate the vendors more easily and reduce
the over pricing in the O&G.
 there is still no alignment among the departments of the organization
 People try to resist the change
CHAPTER 7

POLICIES &
RECOMMENDATIONS FOR
FUTURE MANAGERS
I. TRAINING OF HUMAN CAPITAL
• Oil and gas industry establish and conduct training sessions for human capital up scaling
• Well-defined human capital development program with a variety of training opportunities for
their employees

II. DEVELOPMENT OF IT STRUCTURE

 Improve the current infrastructure

III. RECRUITING YOUNGER PEOPLE

 Young people should be hired in the oil and gas sector
CONCLUSION
 A systematic study to discuss the implication of Block-chain in the oil and gas industry
 How the supply chain resilience can be enhanced by Block-chain technology
 Interviews were conducted from supply chain professional of O&G and following were concluded:
 Current infrastructure of O&G is inadequate to implement Block-chain technology
 IT infrastructure needs more advancement and manual task should be replaced with
automation
 There is a large divergence in the concept and real-world application of blockchain technology
 before moving towards the implication of blockchain technology in the refinery sector, there is
a need to improve the Information & Technology (IT) infrastructure
THANK YOU
ANY QUESTIONS?