IoT to Turn Up Oil and Gas Sector in Africa

The oil and gas industry is going through a period of unprecedented upheaval. Falling crude oil prices have weighed heavily on the sector’s entire value chain, while the availability and accessibility of renewable energy sources both increase oil and gas consumption.

An African vision of the oil and gas industry
In Africa, where the oil and gas industry is the economic engine of many of its biggest powers, the need for innovation in the oil and gas value chain is essential to sustainable growth and success from the continent. By the end of 2013, Africa was estimated to have 228 billion barrels of oil equivalent, with oil accounting for 56 percent of these reserves and gas, 44 percent, according to EY.

The United States was until recently the biggest buyer of African crude oil, but exports fell from 1,8 million barrels/day in 2005 to some 274,000 in 2015. It is to be hoped that new administration augurs an era of renewal in oil exports to the North American market.

According to PwC, one of the key areas on which oil and gas companies should focus if they want to weather the storm is the use of new technologies to innovate, minimize costs and derive more value from infrastructure existing. And of all the emerging technologies, the IoT offers the biggest advantage for the oil and gas industry.

The Internet of Oil & Gas
The oil and gas industry has long been at the forefront of automation and technological advancement. However, the IoT is in the process of completely revolutionizing the industry, from extraction to operations, to customer engagement. Connected objects offer companies in the sector opportunities to enhance security, improve efficiency and ensure visibility throughout the value chain.

A Morgan Stanley report estimates that there is a $ 100 billion global market for stand-alone vehicles in the trucking and logistics industry. With an IO penetration of just 50 percent, the global manufacturing industry can realize up to $ 500 billion in cost savings. In fact, IDC estimates that IOI revenues in Africa and the Middle East will reach $ 114 billion by 2020.

The oil and gas companies have recognized the potential of the IoT and are investing enormous amounts of money in this technology with the objectives of ensuring better uptime, ensuring predictive maintenance, reducing compliance costs and to transform business practices. Asset availability and maintenance emerged as the first key factor of interest in IdO technology: a CRA published strategy report found that 60 percent of respondents rated the downtime of assets.

Fleet management should benefit greatly from the IoT: Essar Projects, the construction contractor, uses GPS and RFID systems to control the movement of its equipment, fuel levels and fuel consumption, thus achieving an economy 5 percent on maintenance and 10 percent on fuel costs. The ability to use sensors to track asset performance and proactively manage maintenance helps the oil and gas companies ensure optimal uptime for their equipment.

IoT: a success story for oil and gas companies
As sensors and connected devices continue to permeate every aspect of the oil and gas value chain, companies will begin to generate unprecedented volumes of data. SAP solutions based on the SAP HANA platform enable organizations to extract valuable information from this data. Companies in the sector can obtain real-time information from several sites, including information on location, project status, environmental factors and safety. Environmental, health and safety management professionals can use employee data – including social media – to identify key risks to operations, while public information that is part of the large data lake can be used to draw popular sentiment on oil and gas operations.

Caution is needed in terms of data security because recent examples of malware have shown that control systems can be attractive targets for intruders who wish to hinder or stop production. It is also important to choose the technology partner: the IoT includes hardware (or HW) data, sensors, appliances, applications, telematics and cloud connectivity. Software vendors who connect and process all these data must have extensive experience to be able to reshape business processes to allow industry companies to take full advantage of the IO.

However, the real value of the IoT for the oil and gas industry is the connection of operational infrastructure to larger commercial software. In-memory computing combines IO data with commercial transactional data in a single, shared database in real time. This allows companies in the industry to have real-time insight into key transactions and asset performance indicators, giving executives better decision-making capability and paving the way for simplified business processes And entirely new business models.

For the oil and gas companies ready to transform their operations by the IoT, the advantages are indisputable. For their success it will be essential to choose the right technology partner that has industry experience and that has a robust in-memory cloud-based platform to bring the benefits of the IoT to life.

Alran is SAP Managing Director for Francophone Africa