Production Strategy for Petroleum Industry: A Case study of Nigerian National Petroleum Company Downstream Operation

Abstract

The petroleum industry faces disruptions constantly on both domestic and global scenes due to uncertainties coupled with long-standing climate challenges from the vast usage of petroleum products. Petroleum-producing countries, especially developing ones need a strategy to sustain production and control environmental challenges at an optimal cost. Our work is part of this context with the definition of a petroleum supply chain optimal production strategy which addresses effective waste management, losses evaluation, and their cost implications in the production and logistics processes. The model proposed a continuous dynamic flow of production and distribution from a set of suppliers to refineries and moved to the warehouse before being dispensed as demanded. Meanwhile, during the flows between nodes, losses, and wastes are evaluated to see their cost implication on the total cost of production. The optimal production strategy proposed is based on a hedging point policy using a real case study of the Nigerian National Petroleum Company. The obtained results are based on simulation to determine two hedging points for production, inventory, and emission of gases during production.