Nothing is more central to the world’s economy than the smooth movement of goods. Yet, the supply chain faces new challenges with the ever-changing political landscape.
The latest conflict in Ukraine will stop 55 billion cubic meters of gas from flowing into Europe. That interruption has a direct effect on project logistics on a global scale. The Nord Stream 2 gas stoppage is only one of many logistics project examples to affect the economy.
But if an oil and gas business relies on supply chain consistency, how does it react to the constant upheaval? Every industry must come to grips with a new economy.
Yet, one conclusion will win the day for moving forward. Large businesses must hire the best project logistics manager to adjust and expand.
Keep reading to look at how a logistics company works with changing trends. This guide provides the information you need to make an informed choice.
Every shipping and logistics project needs a design to suit the goods that are moving. Materials of larger dimensions need special equipment to get them to their destinations.
A typical shipping and logistics project such as retail cannot accommodate oversized materials. So an extreme amount of planning must provide a smooth flow of goods.
A global logistics project like oil and gas must account for every aspect. If those materials are parts of a greater whole, planning becomes more critical.
Today, modules are manufactured all over the world. Shipments must arrive at project sites with precision timing. So each segment of the service must align with the next.
For example, an oil and gas project requires pipeline parts and machinery to build it up. Project logistics managers need the infrastructure to ship all materials to any location. Often, this also includes warehouse management facilities for the storage of material.
An intricate plan of project logistics architecture will factor in every aspect. Each has a place in the project design, from movements of the smallest item to odd-sized machines.
The logistics project manager builds a plan from the ground up to feed every nuance of a project. Coordinating carriers for each module is an enormous task. Goods also must get processed to comply with shipping laws around the world.
The earlier project logistics providers get involved, the better chance of success. Many obstacles get avoided with advanced information about materials. It also gives shippers the time to supply the best equipment for every shipment.
Liquid natural gas, or LNG, will significantly impact investments this year. A 4% increase to $628 billion in oil and gas investments gets a considerable boost from upstream gas and LNG investment.
These two sectors combined grew 14% in investment. While it is still less than the amounts spent before the pandemic, $149 billion in 2022 is a massive boost. The analysis conducted by Rystad Energy reveals significant opportunities.
The trend will continue so that within two years, LNG and gas investment will surpass $168 billion in 2019. By 2024, upstream gas and LNG investment should reach $171 billion.
Downstream investments may fall by 6.7% to $172 billion. But the upstream market for project logistics will increase to $307 billion.
At first, it seemed that consumer spending would remain below pre-pandemic levels. Many countries still see restricted movement. The demand for aviation fuel, for example, is slow to recover.
Yet, there is a positive outlook for global project logistics with increased investment. And if the conflict in Eastern Europe looms larger, it may result in rapid growth in new projects.
An even closer look at investment shows more significant increases. Shale investment expects to jump 22% from $86 billion to $102 billion in 2022.
Offshore, the investment will rise 7% to $155 billion. And in 2022, onshore traditional project investment will increase by 8% to $290 billion.
North American investment will get more than $40 billion of sanctions. The renewed interest will come from six projects expected to get approval. Five of those LNG projects should get going in the United States, with one in Canada.
Saudi Arabia expects to increase oil capacity by 22%. And Qatar is expanding the production and export of LNG.
But the most notable project boost will come from Australia and the Middle East. With new greenfield developments, Australian investment will rise 33% this year.
Rystad noted that much of the investment growth rides with sanctioned 2021 projects. In particular, the $150 billion in 2021 greenfield projects are up from $80 billion from 2020. So Rystad predicts 2022 sanctions will be similar to the year before.
This year still looks quiet for sanctioned projects in Africa at only $5 billion. But there are existing projects that will provide project logistics contract possibilities.
The tender process for the North Platte project should be completed in 2022. That is good news for TotalEnergies and will propel the project forward.
LLOG Exploration should move to the development phase of developments in two projects. The U.S. Gulf of Mexico is home to both Leon and Ballymore for Chevron.
There are about 80 offshore oil and gas projects waiting for sanctioning worldwide. An estimated $85 billion in approvals include ten which are floating production storage and offloading (FPSO).
Subsea tiebacks involve 45 other projects, and 35 consist of grounded platforms. Yet, the deepwater expansion will present more opportunities in 2022. Sanctions in Latin America and Europe account for about 24% of project values.
Guyana and Brazil have pending sanctions. And with recent tax changes, Norway is another region to watch in 2022. When measured by capital investment, Offshore commitments expect to keep rising for years.
The pandemic has forced a shift in projections for several industries. The need for speed is putting pressure on a logistics company to perform.
In the oil and gas sector, more long-term solutions are crucial to the success of a project. Planning and development can take several years before the project bears fruit. The difference creates a gap between freight carriers and the oil industry.
Freight companies, in general, work best in short-term cash flow generating operations. For global project logistics, these companies must commit to investments in transport materials. The expense of infrastructure is prohibitive to many supply chain businesses.
So the oil and gas industry needs partners with expertise and long-term strategies. But rising costs of infrastructure are also an issue. Oil and gas project logistics must also find ways to reduce expenses.
Modernizing equipment and better technology are part of the solution. It’s challenging to reduce transport costs when special equipment is necessary for shipping. But one area for opportunity is in upgrading aging facilities.
Inflation related to the pandemic might be the most significant cause for caution. Steel and other raw materials have increased in price. Supply chain interruptions during the pandemic are primarily to blame.
One of the most significant challenges to oil and gas is the transition to green resources. Projects that involve lower carbon-producing energy are beginning to get more significant investments. A shipping and logistics project in oil and gas must produce savings to budgets.
The demand for oil will likely peak in the next five years, according to Rystad. Capped offshore oil and gas investment to $180 billion in 2025 presents challenges. But while that sector faces a changing investment environment, there are new opportunities.
Investment in offshore wind power development doubled from 2019 to almost $50 billion. With the rising demand for clean energy sources, wind investment could rise to $70 billion by 2025. So for project logistics, contract advantages are still available for offshore services.
Better use of capital expenditures (CAPEX) will play a massive role in improving costs long term. It will require a better selection of developments with the chance for high yield for oil and gas. But an improved hub system from project logistics will make a more significant impact.
Global project logistics will involve choosing location sources closer to the demand. This strategy would help increase the number of projects. In turn, it would attract more spending from logistics on long-term solutions.
Closer projects will enhance the speed of completion with faster delivery models. A shipping and logistics project will become more efficient as distances shorten. Yet, projects can increase in scale with improved logistics handling.
Expediting goods with speed and accuracy is critical. At every facet of the project, goods must move freely from port to port. Excellent inventory management software is vital to defining items that get shipped.
Environmental awareness is more a factor in changes to the forecast in production. There is still high demand for oil and gas products. But green technology can play an enormous role in leveling expenses.
Freight carriers are beginning to move toward electric vehicles. With continuing expected rising fuel costs, green alternatives are becoming a necessity. But other clean energy sources will help the logistics industry.
The sheer size of a logistics company warehouse roof lends itself to solar solutions. A warehouse can power lighting and air conditioning using less than 20% of the energy it will produce. Yet, physical hubs could also transition as energy hubs across the network.
The same project logistics architecture can work for new oil and gas projects. Cost reductions in energy consumption will offset some logistics expenses.
All that said, oil and gas will remain dominant investments for the near future. Choosing the proper logistics project manager is as essential to cost savings as energy reduction.
Of course, safety is the primary concern for a logistics project manager in any field. Safe transport is even more critical in the oil and gas supply chain. For that reason alone, a detailed plan for a shipping and logistics project must start from the ground up.
Yet, technology is the crucial element to improvements in project logistics architecture. With constant changes to development sanctions, the software needs the agility to adjust. Every facet of a project needs the coordination of materials to succeed.
The scope of an oil and gas project requires acute knowledge of the industry. Delays in delivery of the smallest item can create backlogs and project interruptions. So the planning begins with an account of all materials.
The logistics project manager must then coordinate the transport of materials as needed. But with large-scale projects like oil and gas, special equipment is also essential. Providing transport, loading, and offloading unusual machinery is also a significant task.
Global project logistics involves constant communication across supply chain channels. The logistics company needs partners to source freight carriers around the world. Only a logistics company with an established network can provide these shipping solutions.
Many delivery solutions include maritime freight movements. But there will be times when urgent services are necessary. The logistics company must have access to emergency air freight, for example.
Last, the pressure to reduce budget costs is enormous for the oil and gas industry. Logistics project examples that use automation to reduce labor costs will improve budgets.
The earliest analysis stage will produce better project logistics architecture when the logistics company gets involved from the start.
People are vital to creating a winning formula in oil and gas project logistics. There is no detail too small that can afford to go unaddressed. Safety and supply chain concerns have to work today with tighter budgets.
The simple fact is no business can succeed without a team of extraordinary partners. The oil and gas industry must have reliable networks to move their materials. Timing and coordination are critical, so a qualified logistics project manager is essential.
So teaming up with a knowledge base should be the first step toward every successful venture. Get the support you need and expect, and contact us for your next shipping and logistics project.
Onsite Global Logistics is a third party logistics provider 3PL helping companies with innovative global logistics and supply chain solutions
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