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Oil refiners are slowly realising increased digital potential – Accenture

4th September 2019

By: Marleny Arnoldi

Deputy Editor Online

     

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Oil refiners are increasing investments in digital technologies despite low improvements in operating margins from these technologies, says NYSE-listed multinational professional services company Accenture.

Accenture on Wednesday released its third yearly study on digital technology in the refining industry, called ‘Digital Re-Definery’, which surveyed 145 oil industry professionals globally, including C-suite executives, functional leaders and engineers.

According to the report, over the past year, the number of refiners reporting that digital technologies delivered a margin improvement of more than 10% in refining operations dropped from 11% to 3%.

The number of refiners reporting that the technologies delivered margin improvements of between 7% and 10% dropped from 19% to 11% over the past year.

Additionally, the number of refiners reporting that digital delivered margin improvements of between 2% and 6% dropped from 46% to 38%.

Sixty-two per cent of professionals surveyed cited advanced data analytics as the technology that drove the greatest margin improvement in their operations over the last three to five years.

The next-best digital technologies that drive margin improvement were found to be platforms and Internet of Things sensors and edge computing.

Only 3% of respondents this year said they generated significant value from digital technologies, compared with 6% of respondents in the prior year’s report; while 28% of respondents – the largest potion – said digital was driving around $5-million in value for their refining business.

Accenture therefore suggests that the challenge of achieving scale for digital initiatives across an asset base is stopping refiners from capturing the full value that digital technologies can offer.

Nonetheless, digital spending continues to increase at roughly the same rate as prior years, with 56% of respondents saying that they are investing more or significantly more in digital technology than they were 12 months ago.

Accenture asked the respondents in what areas of their operations digital technologies were having the most impact, to which 59% of respondents said production planning and execution, followed by maintenance and reliability, and thereafter engineering and capital projects.

The report further found that refiners were becoming more realistic in the assessments of their digital capabilities. Only 44% of respondents this year categorised their use of digital technologies as mature or semi-mature, compared with 48% of respondents last year.

Moreover, the report highlighted that 48% of respondents consider resistance from their employees and the culture in their organisation as a barrier to wider digital employment, compared with 33% last year.

“There is no one answer on how to best organise the integration of your information technology (IT) and operational technology, as this depends on company culture and leadership strategy.

“Having launched many proofs of concept, refiners must now revisit the operational processes to enable scale and pace,” says Accenture Resources Industry X MD and global lead Tracey Countryman.

Accenture Resources Africa MD Cameron Tandy adds that South Africa has seen a strong push for digital solutions to unlock trapped value in operations.

“Our clients are moving from a ‘wide-and-shallow’ experimental approach towards proof of concepts that have a laser focus on fewer initiatives, which provides a much better chance of scaling successfully and sustainably.”

The Accenture report found that refiners were addressing these issues. Five in six respondents, or 83% overall, are taking actions to address the convergence of IT and operational technology for their refining operations.

These actions include changing the role of IT in their operation, creating new organisational structures for digital, forming steering communities and creating new C-level positions.

 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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