Prince Amir Al Saud

Challenges of the Upstream and Downstream Sector

Challenges of the Upstream and Downstream Sector


Think Oil


This is why the costs of other commodities increase with increase in the cost of oil and gas. This makes it very important to regulate the cost of oil and gas in order to ensure that the costs of other goods and services are reduced or kept optimal.

No modern society can run smoothly without oil and gas. This is why these products are very important today. Essentially, the demand of oil and gas exceed their production. This also explains the reason why countries with huge deposit of crude oil are among the richest nations of the world. Since the functionality of a modern society relies to a huge extent on crude oil, it is then very important to employ high tech and cutting edge technological processes towards this important field in order to ensure effectiveness in the process.

Oil and gas are highly demanded in industries as well as for commercial and domestic purposes. The products are used for lots of purposes ranging from the driving of machineries to the production of plastics and fertilizers. Indeed, the world would lose its taste if oil and gas are removed from existence.

An Overview of the Upstream and Downstream Sector of the Industry

To really understand the processes involved in the oil and gas industry, it makes sense to consider its subdivisions.

The oil and gas industry is essentially subdivided into three phases and these include:

Upstream sector

Midstream sector

Downstream sector

Before examining these phases, it is important to note that the midstream sector is also included in the downstream sector.


Upstream sector

The upstream sector of the oil and gas industry involves processes including the searching for and the recovery of crude oil as well as its production. In the upstream sector, discovery or exploration of crude oil takes place. This involves intensive and extensive efforts towards ascertaining the actual places where crude oil is located.

Exploration is a very difficult process and therefore requires the service of experts in the field. More so, information technology plays active roles in the exploration or searching of crude oil in order to easily discover new grounds where oil is located and therefore take advantage of them.

The upstream sector includes different operations such as the searching for prospective underwater oil and gas fields, drilling of exploratory wells and also making requisite operations on the well so as to bring the crude oil or natural gas to the ground surface.


Downstream sector

The downstream sector of the oil and gas industry involves the refining of the crude oil and/or raw natural gases obtained in the upstream sector as well as selling or distributing the products obtained. Many products are derived from the refining of crude oil and these may include diesel oil, liquefied petroleum gas (LPG), asphalt, petroleum coke, gasoline, fertilizers, antifreeze, plastics, rubbers, pesticides, synthetic rubber, jet fuel and many more.

The downstream sector of the industry is the sector that relates with the consumers. Facilities involved in this sector include petrochemical plants, oil refineries, natural gas distribution companies, retail outlets and so forth.

The main processes involved in the upstream and downstream oil and gas operation include the following:







Information Technology and the Oil and Gas Industry

Information technology has become very relevant in different fields of life, industrial and commercial activities over the past few decades. Today, no industry can exist or became fully operative without information technology. As much as information technology is very relevant in other industrial fields, it is highly essential in the oil and gas industry. Different operations in the oil and gas industry depend solely on information technology and can only achieve efficiency thereof.

This simply implies that advance in information technology would simply result to the betterment of the oil and gas industry as well as every other field of life. This is why lots of intensive researches are being done on information technology in the recent time and these have resulted to unimaginable impact in the oil and gas industry.

One of the most striking developments in the IT industry which has helped information dissemination in the oil and gas industry was developed by the World Wide Web Consortium (W3C) about a decade ago. This technology known as XML (Extensible Markup Language) uses tags and unstructured patterns in developing requisite data (referred to as well-formed and valid data) for information dissemination. The most wonderful thing with XML is that it is structured in such a way that the information would be readable by both machines and humans. Other technologies such as SGML and HTML for transferring data were also developed by the W3C; however XML is the most beneficial of them all in information dissemination.

Upstream Challenges

We will look at the challenges and opportunities in the upstream oil and gas industry facing in current information technology era.

1) Management and Information

Global forces such as geopolitical pressures are troubling the industry. We therefore need the knowledge, contacts and skills to effectively adapt to these troubles and geopolitical insecurity in the industry. It is also very important that we make appropriate efforts towards anticipating and reacting to the radical changes on the global sphere.

Some challenges in the upstream oil and gas industry can be effectively resolved if we lay emphasis on the new interdependencies between senior management information, operational effectiveness and decision making. We also need to appraise and understand their impact on our overall profit margins. This can go a long way in solving our problem.

The management involvement in information system (IS) and MSI advancement is really crucial like MIS Quart. 9. Originally, management may feel it difficult to come to be engaged much beyond the front end of IS advancement as a result of the extreme distinction in between the methods and languages of the data processing (DP).One more essential development that have actually made it possible for administration to take part additionaltoday. IS development has actually been the information analysis methods. These have actually made it possible for the data and processes of company systems to be assessed in totally logical terms, generating a logical information model independent of any type of DP terminology or hardware considerations

2) Increasing the production of liquid fuels

Oil and Gas has facing a real challenge of shortage of liquid fuel in this era. There is great need to increase the production of liquid fuel in the upstream sector. The output from Canada’s oil sand can be increased by threefold by 2035 which is equivalent to 4.5 billion barrels per day has the capacity to extract more oil and made effective. Not only that, but also there should be efficient avenues in place to bring the extracted products to the market. The American Petroleum Institute pointed out that oil sand production can be limited in 2014 because of shortage or inadequacy of pipelines leading from refineries to the market.

To make the Canada’s oil sand to become more beneficial and efficient, there is need to put the right upgraders and pipelines in place. Shell has achieved substantial success by increasing capacity at the Athabasca Oil Sands Project in Alberta by 100000 barrels per day. It has also opened a second mine in which it expanded the upgrader which converts bitumen to crude.

Again, the rising demand for oil and gas can be met by diversifying the transport fuel mix with hi-tech technologies. This can be achieved by increasing the contribution of biofuels. Biofuels are highly beneficial as they are very compatible with existing infrastructures and therefore can be sold and distributed in ordinary filling stations.

3) Sources of Crude Oil

If we take a close look at the sources of oil and gas, we will realize that they are not renewable natural resources. The intensive use of oil and gas today places the fate of the world’s crude oil supply at risk. In some countries like Brazil, China, and India, crude oil is used in alarming rate on a daily basis. Thus, this is a big challenge to the oil and gas industry. However, it is quite obvious that the challenge cannot be solved by preventing people from using oil and gas or their products. Oil and gas are very pivotal to the modern society and without them the modern society will not run smoothly or effectively. Thus, an alternative means should be sought in order to solve this challenge.

The primary way of dealing with this problem is by devising alternative means and avenues for oil exploration. Alternative sources of oil can be devised in order to save the world’s oil and gas. More so, we can employ the state of the art technologies available today in order to convert various natural resources to petroleum products. A good example of this is agricultural products and biofuel. Shale oil can also be employed as an alternative source of oil or energy.

Information technology is needed to achieve these aims. It can be employed in discovering and analyzing the alternative sources of energy. Data can be effectively collected and organized in a useful form so as to create a basis for decision making. This forms decision support systems (DSS) used in various companies for decision making and drawing inferences. With the presence of much intelligence software today, this can be achieved with ease.

4) Operational Challenges

The models used by the oil industry in the 20th century are becoming rather antique. The models are now seriously facing challenges and of course new models are being invented. The integrated model has an original digital logic aimed at providing a natural hedge, market access and balanced funding. With the help of integration, the operation and value chain can be optimized. The downstream sector can finance the upstream sector in order to achieve greater operation. By ensuring better integration, the oil and gas industry can balance its upstream and downstream operation and hence reduce volatility and risks.

Oil industries such as ExxonMobil, Royal Dutch Shell, and ConocoPhilips oftentimes employ vertical integration model which involve the entire value chains. Anxiety in investment has also increased since capital market does not realize the value of integration. Economies of scale and access to technology are not enough to solve the problems faced in the upstream sector of the oil industry. Some of the challenges faced in the upstream sectors today are caused by the structure of the downstream sector and investors.

Exploration automation seeks to do simply that through process renovations, enhanced rate of penetration, constant smooth quality drilling and overall exploration efficiency. Norway's Robotic Drilling Systems AS, previously Seabed Rig, developed an innovative autonomous robotic exploration gear for unmanned exploration operations. The business asserts that the new device, Robotic Drilling System (RDS), establishes brand-new criteria with raised security and cost-effective preparation and drilling and could be applied on existing, in addition to new exploration structures, both offshore and on land. Presently, the RDS utilizes autonomous robot working procedures that could be controlled by remote control system with an interactive 3D user interface

5) Energy Demand and Supply

There is intense problem of demand and supply in the upstream sector of the oil and gas industry. It is quite obvious that the demand for crude oil is greater than its supply. Ongoing tensions in the Middle East and economic uncertainty were pointed out in the 13th international Oil Summit but this points towards improved outlook of course the risks cannot be denied.

Due to population and economic growth, the global energy demand may double in the first half of the century. IEA stated that the global fuel demand could rise by 26 percent in the next 25 years; that is over 110 million barrels per day. Asian emerging economies will experience the most of the growth. Vehicle fleet in China could triple to 600 million vehicles in 20 years time. Global oil supply will struggle to keep pace with the demand due to decreasing output in mature fields by about 80 percent in 2035.

The high end data management and analytics available today can be wielded towards solving these challenges. The requisite data can be analyzed, archived, digitized and defined appropriately. This will depend heavily on the new XML technology while deals with unstructured data format. Different kinds of data can be parsed with it to ensure high efficiency in the process. Structured data analysis should also play a part in this game. The text based XML can be transformed into datasets with the use of data adapters so as to connect it to required structured databases such as SQL Server, Oracle DB, Access DB and so forth. This can be channeled towards revolutionizing the oil and gas industry.

6) Environmental Pollution

Environmental pollution is a major issue in the upstream oil and gas sector. There is lots of oil and corroded pipelines still used today resulting to oil spill which degrades the environment.

For example: Shell has led to lots of environmental pollution in the Niger Delta. Lots of their pipelines in the region are old and corroded, resulting to oil spillage and pollution. However, the oil company has denied responsibility for pollution. Thus, Niger Delta residents and citizens have protested greatly against Shell and similar oil ventures. In a case in January 2013, a Dutch court rejected four out of five allegations posed on Shell on pollution in the Niger Delta but a subsidiary firm was found guilty and asked to pay compensation to Nigerian farmers. Same issue was experienced in Magdalena, Argentina. Here Shell was also responsible for environmental pollution. On 15 January 1999, a shell tank in the region collided with another oil tank and polluted to fresh water.

Storyboards can be geared towards solving this problem. It deals with the simulation of industrial accidents (gas leakages) and condensate.

Storyboard is a term borrowed from the filmmaking industry; it involves narrating series of complex tasks. It can store hundreds of events. These can involve sensitive information. This can be employed towards building a framework involving “knowledge base” with the use of NKRL (Narrative Knowledge Representation Language) which involves the collection of formal statement with negligible loss of information.

7) Fluctuating Crude Prices

Political instability and problems in various regions of the world has led to the fluctuation in fuel prices. Crude price went from a high value of $150 per barrel in the middle of 2008 to less than $40 per barrel at the beginning of 2009.

The political issues resulting to the fluctuation in crude prices include slow approval of new capital projects, the squeezing of talents as a result of early retirements and acquisition activity. It is very important to maintain effective operation as well as ensure that the margin is maintained in the environment. Atomization of drilling mechanism and robotic technology can play a pivotal role to overcome this challenge.

8) Economic Uncertainty

This is another risk faced in the oil and gas sector which has led to the slow movement of some firms in the upstream sector. Most people will not classify economic uncertainty as a challenge or risk but on carefully analyzing, it will become very obvious that this is a challenge.

It is simply the uncertainty in economics. It can be defined as the unknown prospect or possibility of gain or loss. Whether this factor is quantified as a risk or not, it has a direct impact on employment, income aspects and communication among the various companies and firms in the value chains of the oil industry.

Information technology has great influence on business activities and economics. Changes take place in every part of the business; development of goods and technology, procurement, production, sales, distribution, and post-sale services. Due to CAD and CASE, enterprises lay great importance on rapid development of diverse goods and technology in order to satisfy customers. Companies can change production system from mass production under economy of scale into production on demand by CAM and ERP.

9) The People Shortage

The lack of skilled personnel and manpower or main operations requiring high tech processes in the oil and gas industry is a challenge in most parts of the world especially in the upstream sector of the industry. Processes in the upstream sector such as exploration and production requires high technicality and therefore there is need for skilled manpower. This has limited many operations in different parts of the world such as in Nigeria.

This problem can however be solved by attracting and encouraging more talented young men and women into the science and engineering discipline and hence into the oil and gas industry. Trainings have to be made highly efficient in various parts of the world especially in the information technology aspect to help young people understand how to manage the operations?

10) Marketing

Marketing is another heavy issue in the oil and gas industry. China produces far less crude oil and has less than half the refining power than the United States of America but research states that the oil demands of China will exceed that of the US by 2035. To have these problems solved or adapted to, the IEA made estimation that there is need for $10 trillion new oil infrastructures by 2035. This involves $3 million investment per second for up to 25 years, adding to the huge challenge. Therefore the available resources have to be channeled towards making better investments to improve marketing and pricing in the upstream oil and gas operations.

In upstream and especially in downstream, the most engaging modification of the strategy to the marketing feature because the millennium has actually been changing from Outbound Marketing to Inbound Marketing. Building from the experiences picked up from doing business in the new Web 2.0 era, businesses have actually pertained to acknowledge the overwhelming benefits of drawing consumers towards their item, as opposed to driving their products towards their customers.


Downstream Challenges 

The downstream sector of the industry has broad scope and tentacles. These include crude supply, trading, refining, product distribution, marketing and retailing. Lots of products are involved here including conventional fuels such as gasoline and diesel and low carbon fuels such as bio diesel.

Lots of challenges are faced in the downstream oil and gas sector. The operating capacity of the global refining industries is continually constrained and therefore there is need for expansion in their various phases. Crude oil produced today is becoming heavier and sourer and product specifications are tightened by increasing strict environmental legislation. This has led to the need for changes in the refining configuration of many oil players. More so, marketing margins are getting lower as a result of competition from advantaged entrants.

The main challenges faced by downstream sector are discussed as below:

1) Business Joint Ventures

Downstream sector is facing serious challenge due to lack of Information knowledge management (IKM). In order to overcome, there is need for joint forces and alliances between various industries to be able to arrest this problem in the oil and gas sector. Some important industries such as oil companies, service companies, academia, government and so forth should poll their knowledge together so as to achieve a better result and solve problems plaguing our industry at reduced cost and as fast as possible.

To really achieve the desired aim at purposes then it is important to ensure the following:

The various value chains of the oil industries should integrate and target at the same purposes.

Joint and targeted investment should be made in the industry outside the host country.

Risks should be shared and there should be diverse commercial terms.

The workforce is very important and therefore should be developed. More so, state of the art technologies should be transferred in order to aid efficiency at all levels and value chains of the industry.

The collaboration should also include a greater shared control.

Shell launched the Raizen joint venture with Cosan in Brazil with the aim of producing and distributing up to 2 billion liters of sugar-cane ethanol each year. The ethanol emits 70 percent less pollution than standard petrol through its lifecycle and therefore with their use, liquid fuel will be more environmentally accepted in regions of tighter legislation.

Natural gas is another promising area. The development of new resources such as shale gas gives promising future. There is good supply of natural gas in North America today. Natural gas can be converted into liquid fuel and it can be used directly as a transport fuel. Shell and Qatar Petroleum bring new innovations and significant changes into the industry. They have made a total investment of between $18 and $19 billion showing the scale of infrastructure needed to meet rising demands. Pearl is also another promising company which produces lots of GTL gasoil that can fill 160000 cars a day. They also provide other products, chemicals and lubricants helping to generate revenue to the nation.

Shell is also developing and LNG refueling station in Canada which will enable trucks to use natural gases instead of diesel. With developing technology, liquefied natural gases will play a vital role in the transportation of fuel mix.

2) Global Refining Capacity

There is an emergence of a structural global surplus with significant economic growth in various areas. This is driven by increasing refining capacity in various regions such as Asia (China and India), the Middle East (Saudi Arabia and the United Arab Emirates) and in Latin America (Brazil). The cumulative impact on a global scale would be reduced margins. The net growth rate would be between 25 and 30 percent higher than the existing capacity with a CAGR of 4% per year. Of course, the planned expansions may not all be sanctioned or completed.

However, the key factors of the growth are as follows:

Much of the planned expansions were sponsored by national oil companies.

Most of the new capacity will capture economies of scale with greater degree of efficiency and sophistication.

Old refineries will rather die than close and also environmental and social costs of closure can be very high in countries like Europe and America.

The industry has to do a number of things to avoid these risks. These include increasing liquid fuel supplies, diversifying the transport fuel mix and building greater flexibility in the downstream infrastructure.

Reliable instrumentation and controls, and trusted technologies like robotic system could raise ability. Basically, the rate of development in the downstream industry is being assisted by using innovations and expertise frequently created in various other industries to boost legacy refining procedures. Developments in sophisticated procedure instrumentation and controls have enabled refineries not only to operate more efficiently and safely but likewise to create fuels to more-exacting product high quality requirements in a much more trustworthy way, minimizing their "performance window" and enhancing high quality guarantee has enabled refinery drivers to create cleaner and higher-performance gases

3) Corporate communication

Corporate communication involves orchestrating and managing different internal and external communications in order to create favorable point of view among stakeholders. This involves issuing a message by an organization to its audiences which might include the employees, the media, partners and so forth. With the aid of corporate communication, organizations will be able to explain their missions and gear towards achieving their purposes and visions. It helps stakeholders to be linked to the company in question.

In the downstream oil and gas operation, corporate communication is very important in order to determine efficiency in the various processes. The stakeholders should be able to know issues taking place in the trading and refining of the oil. Information technology plays vital role in corporate communication as it can be wielded to ensure that it is done effectively. Various measures can be involved in order to essentially supervise and monitor activities taking place at real time in the rig. With the aid of advanced software, live performances can be compared with historical trends in order for quick conclusions to be drawn with ease. SWOT analysis and IE Matrix need to be practiced intensively to enhance effectiveness of corporate communication. Requisite software can be used in establishing alerts to notify the required sources of events taking place at each point in time.

4) Distribution Activities for Oil Products

Distribution and trading is a very vital aspect of the downstream sector of the oil industry. Without establishing appropriate avenues for trading, the operation of the oil and gas industry will be futile. Thus, the value chains should be properly examined in order to ensure efficient trading and distribution of the products.

More so, efficient avenues should be devised for ensuring that the products are maintained at steady prices when it comes to distribution. In some parts of the world, the price of the products is unnecessarily increased in their distribution centers leading to intense burdens on the consumers.

Like upstream industry Outbound Marketing to Inbound Marketing must be examined. Building from the experiences selected up from doing company in the new Web 2.0 age, businesses have in fact concerned recognized the overwhelming perks of attracting consumers to their item, as opposed to steering their products towards their clients.

5) Crude Supply Mechanism

Various challenges are faced in the supply mechanism of crude oil. The performance of the supply chain can be greatly affected by timely flow of accurate information. All hope lies on information technology to ensure optimization in the process although it currently seems to be a huge challenge. To ensure efficiency in this process, various processes and technicalities should be brought together. These include modeling, designing and monitoring of engineering assets.

With the use of reliable transport system and quick method of disseminating information, oil supply can be mechanized and carrying cost can be reduced. Information technology should be incorporated by oil firms to integrate suppliers and customers. This can be effectively achieved with the appropriate use of ERP. An example of state of the art solution is mechanism such as GTL project with Qatar Petroleum. Shell has also been playing vital role in this by perfecting the technology behind Pearl and therefore it holds 3500 patents in the GTL project.

In addition, adapting a supply-chain modern technology technique could additionally result in every user of the system could access all computational web servers with higher speed data access, link to real-time higher rate visualization, and take part in sensible collaboration, and be provided on-the-spot firm irrespective of the user's area or desktop gadget. This allows the supervisors to handle better crude oil supply. In addition, such practical aspects as business-process modeling, automated notice, information accessibility and sharing, and visualization ought to be offered to the provider simply as it is to employees and other interested events. This step is essential in order to optimize the potential advantages of the collaboration in between oil and gas business and its vendor organizations

6) Health, Safety and Environmental Security

The safety of the human environment as well as health protection should be the number one priority or concerns in the oil and gas industry. Legislation like implementation of ISO15926 has forced oil and gas companies to comply it. Hydraulic fracturing, a common technique in extracting gas from unconventional reservoirs have resulted to lots of environmental concerns and issues with the water table. Therefore, oil firms should pay greater attentions to health and safety issues with broader operation concerns through the various stages of the value chains.

In a gas and oil sector context, as matter of fact,the setup of conceptual descriptions is ISO 15926 ("Industrial automation devices and combination-- Integration of life-cycle information for procedure plants consisting of oil and gas production facilities"), Several position papers presented at the "W3C Oil & Gas" Workshop have actually proposed, as a matter of fact, some kinds of combination in between ISO 15926 and the W3C languages.

ISO 15926 presently consists of 7 Parts. The published ones are Parts 1, 2 and 4. Component 1 is the "Introduction". Part 2, the "Data Model", associated with the 4D model-- executed making usage of the STEP information modeling language EXPRESS. This model is used to define basic (axiomatic) ideas like "thing" , "specific" or "property", and “class”, the specific principles and connections used to carry out the space-- time method and to describe after that adjustments of physical parameters, and some common connections appropriate to engineering tasks like "link", "configuration", "containment" and "participation". This data version could be mapped to an OWL-based taxonomy.

Requisite technologies can be employed in order to monitor and recognize gas leakage alarms in a gas processing plant and therefore trigger various processes to activate a gas turbine. Narrative Knowledge Representation Language (NKRL) can be utilized to reveal this sort of details and to set up the data base. NKRL is a conceptual meta-model created to deal in an intelligent and full way with complicated and content rich narrative information sources.

7) Manpower and Economy

A new study entitled “The Economic Impacts of the Oil and Natural Gas Industry on the US” made by Price Waterhouse Coopers (PWC) discovered that the US oil and natural gas industry supports over 9 million American jobs and makes significant contribution to the economy which is under immense pressure and has become a serious challenge.

The industry contributes over $1 trillion to the economy which amounts to 7.5 percent of the US GDP. The studies also showed that oil and natural gas play vital role in the US even beyond oil producing states and regions. Oil and natural gas is the backbone of the US economy. It is a major source of growth and job creation in the nation. It was a succor during recession time and creates more jobs and employment than any other industry.

8) Refinery incapability and the Need for Expansion

It has not really been easy in the downstream sector of the industry to meet the challenge of refining incapability. Lots of factors such as economic downturn, higher oil prices and improving vehicle efficiency has reduced demands in the downstream sectors. Refinery closures have also been erupted by tightened margins.

Automatic devices can be incorporated in refineries for the complying with functionality to overcome as:

Automatic tracking of all procedure specifications and tools status parameters,

Automatic security of procedure devices in case kept track of criteria get to emergency situation,

Upkeep of common procedure methods,

Quit shutoffs control,

Programmable control and security of pump systems,

Procedure parameters control.

In this context we consider example UK, the number of refineries in 1970s was 18 but today they have reduced to 8. Some existing refineries are not really suitable and capable of refining more difficult crude. Increasing import of higher-sulphur crudes puts pressure on Chinese refineries designed for processing sweeter crudes.

To solve these problems, there is need for more efficient, flexible and integrated refineries. With the tough investment climate of today, this is obviously a big task. However, a beacon of hope is the Shell and Saudi Aramco’s Motiva Joint Venture targeted at expanding the Port Arthur Refinery in the Gulf of Mexico in order to increase the barrels of crudes produced per day from 275000 to 600000. This is a part of Shell’s plan for selective downstream expansion.

9) Pricing

Some major challenges in different regions of the world pose lots of problems and results to increased pricing. For instance, the easily accessible oil is trapped in some regions of the world and therefore is inaccessible. Therefore supply oftentimes comes from challenging and remote regions of the world and this result to high oil prices.

If the production cost of crude is high then prices will also get high. Because of the above mentioned factors, crude prices are relatively high in the world. To solve the challenge, information technology can be brought into the scenario to discover alternative sources of oil and gas. Cutting edge technologies can be employed to leverage oil sources such as shale gas and so forth. However, another challenge in the downstream is shifting demand and increasing reliance on complex oils.

10) The cost of Services

Increased cost of services is another huge challenge facing oil and gas. This increased cost cuts across the value chains from exploration to production as well as refining and transportation. This simply results to higher commodity prices and it has driven the industry activity to a point where the service industry lacks the capacity to respond.

Virtualization can maximize the usage of existing resources; simplifies facilities and software application management, maintenance, and deployment; and decreases hardware requirements, causing less power consumption, and lesser cooling costs. Downstream sector can use Server Virtualization and Desktop Virtualization to manage cost of services. Using Esri's server innovations in a virtualized setting indicates that individuals have more access to GIS processing capacities with lesser hardware and energy expenses


Obviously, the upstream and downstream value chains of the oil and gas industry face lots of challenges which have been clearly evaluated. These challenges have constrained lots of activities in the oil and gas industry and crippled lots of processes. However, it has also become quite clear that information technology and automatic devices including robotics are highly needed to solve these challenges in the oil and gas industry as well as every other industry in the twenty first century.

The latest technologies for data management, analysis, relaying and dissemination can be channeled towards ensuring effectiveness in the various value chains of the oil and gas industry. The text based format of XML as well as the structured format of DBMS would fit into many of these processes and would go a long way to ensure effective documentation of the processes so as to ensure appropriate data management.NKRL (Narrative Knowledge Representation Language) can be used to express information and to set up knowledge base. This will go a long way in monitoring gas leakages in processing plants and therefore set up appropriate alarm systems and notifications. Many other IT state of the art technologies can be used in monitoring rig activities at real time so as to ensure all round efficiency in the process and overcome the challenges.

Truly, for oil and gas industry to make headways in the next phase of this century, information technology should be used as a strong backbone to the industry. The good news is that many key players in the oil industry have already begun leveraging the benefits of information technology but this is not enough. The IOCs (Integrated Oil and Gas Companies) have to cooperate in both the upstream and the downstream sector to ensure efficiency in the entire processes. 

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