System Dynamics Approach to Evaluate the Oil and Gas Supply Chain: A Case Study

Abstract

The worldwide economic shock caused by the COVID-19 outbreak has widespread and dramatic effects on the energy sector [1]. The World Health Organization (WHO) declared the COVID-19 outbreak as a pandemic by early March 2020, which resulted in the imposition of partial to complete lockdown in almost all countries and territories worldwide. This unprecedented shock has led oil and gas markets through a strong supply and trade adjustment, resulting in historically low spot prices and a drastic fall in demand [1]. Since the oil and gas supply chain is very dynamic in nature, the disturbances in maintenance operations and routine work in the oil and gas industry may result in heavy disruptions in the oil and gas industry by affecting the various areas like workforce, production, and storage in the supply chain [ 1, 2].

This study is oriented towards the comprehensive study of the upstream oil and gas supply chain, and briefly discusses the complete oil gas supply chain. We have investigated the disruption in the supply chain based on the comparative study of the pre-pandemic and post-pandemic situations. The most affected areas of the supply chain due to the disruptions are termed as 'Hotspots' and these disruptions are imitated by developing a model in Stella software, implementing the system dynamics approach. Further, the model has worked for one fiscal year by providing data input of oil/gas prices, current and forecasted demand and impact of COVID -19 is analysed.