Crude Oil Supply Research Articles

Identifying the Determinants of Crude Oil Market Volatility by the Multivariate GARCH-MIDAS Model

Many macro-level variables have been used in forecasting crude oil price volatility. This article aims to identify which variables have the greatest impact and give more accurate predictions. The GARCH-MIDAS model with variable selection enables us to incorporate many variables in a single model. By combining the log-likelihood function with adaptive lasso penalty, three most informative determinants have been identified, namely, macroeconomic uncertainty, financial uncertainty and default yield spread. Out-of-sample results show that using these three variables significantly improves prediction accuracy compared to baseline models. However, the variables widely studied by other scholars, such as the supply and demand of crude oil, industrial production index, etc., were not selected, indicating that the impact of these variables may be overestimated. When studying crude oil price volatility, macroeconomic and financial market uncertainties can be used as effective predictors for investors and market analysts. Crude oil market participants should focus on macroeconomic and financial market uncertainties to make risk management more efficient.

Crude Oil Market Functioning and Sustainable Development Goals: Case of OPEC++-Participating Countries

This article aims to substantiate the factors by which the oil industry influences the sustainable development of OPEC++-participating countries under conditions of uncertainty. The impact of the price parameters of the world oil market and the tools of its regulation on the sustainability of OPEC++-participating countries was assessed using panel regression analysis. The sustainable development level of OPEC++-participating countries was analyzed by the integrated estimation method, focusing on crude oil market functioning features. Undoubtedly, we can testify that there is a direct correlation between the country’s level of socio-economic development and sustainable development. In resource economies, a reduction in oil production and exports cannot have the same effect on sustainable development as in countries that do not produce oil, or are characterized by a higher level of economic development. With an appropriate level of economic diversification and the effectiveness of the institutional framework for managing the oil market, sustainable development can be achieved. Based on the model of the integrated assessment of the sustainable development of oil-exporting countries, the impact of statistically significant financial investors’ panic factor on the imbalance of oil prices due to the uncertainty of economic development was determined. Key indicators that create a panic factor in the oil market were identified. These include the indicators of the number of countries enforcing lockdown and the pandemic’s duration. We argue for the need to develop an effective strategy for achieving the sustainable development goals (SDGs) in OPEC++-participating countries, based on the management of crude oil supply and demand forces and by considering the effect of financial investors’ panic factor on the oil market.

Biodiesel Produced from Pangasius Oil Operating a Diesel Engine: Case Study in Vietnam

Fossil fuel is one of the sources leading to the increasing greenhouse gas that causes global warming. It is also seen that the volume of oil discovered worldwide every five years is decreasing. Finding ways to replace petrol-diesel with biodiesel for use in internal combustion engines to reduce CO2 and overcome the diminishing supply of crude oil has attracted many researchers. Viet Nam is a country known as one of the world's largest producers of catfish. We mix biodiesel produced from Vietnamese pangasius fish fat with petrol-diesel at four blend ratios of 0%, 20%, 40%, and 60% to produce samples labeled, B0, B20, B40, and B60, respectively. These biodiesel blends were then used to operate a petrol-diesel engine for experimental investigation. The results show that the torque and power would decrease as the biofuel ratio increased. However, the rate of decrease of these parameters did not exceed 16%, even when the ratio of biofuel in the biodiesel was up to 60%. The average power reduction of biodiesel blends was only about 8.70%. In terms of exhaust emissions, there was a significant reduction of CO, NOx, HC, CO2, and smoke opacity when biodiesel was used. The CO, CO2, and smoke opacity reduction was about 64.3%,15.1%, and 23.2% for the B60 fuel. In addition, the results also indicate that it is entirely possible to use biofuel produced from pangasius fish fat for internal combustion engines without changing the engine structure.

Globalization and the oil market: An overview on considering petroleum as a trade commodity

Today, the process of globalization and globalization of the economy is one of the most important issues in the world. In this process, the manner and rules of trade of some goods with a strategic international trade position are more important. Energy carriers, especially crude oil, are among these commodities that are considered strategic commodities in foreign trade. The inclusion of crude oil among the World Trade Organization commodities has raised various issues. Since the oil price in the market is affected by factors such as psychological factors and supply and demand, the inclusion of oil in the World Trade Organization will, directly and indirectly, affect these factors. Principles such as national behavior can directly affect crude oil demand. Also, the principle of quantitative restriction can directly affect the supply of crude oil. Besides, agreements such as the General Tariff and Trade Agreement, the Service Trade Agreement, and the Technical Barriers to Trade Agreement can influence engineering service providers' roles at various stages and move them toward competition.

The small world of global marine crude oil trade based on crude oil tanker flows

Global marine crude oil trade is a direct reflection of global economic trends. This study uses the real-world historical ship automatic identification system (AIS) data from 2014 to 2017 to explore the flows of crude oil tanker trade between ports and construct a port-node global crude oil trade model. An analysis framework of “AIS data -> crude oil tanker trade flows -> port-node crude oil trade network -> port-node crude oil trade backbone network” is proposed to realize the progressive analysis of global marine crude oil trade. The global port-node crude oil trade network is a small world, in which there are multiple small world port-node trade communities. Compared with the community structure of the global port-node crude oil trade in previous years, the Middle East–Southern Africa–South Asia–Oceania–Asia Pacific community and the Southern Africa–China community have more activities in port nodes and trade links in 2017, which reflects that the Asia-Pacific region, especially East Asian countries, is making efforts to expand the Oceania and African markets and increase the diversity of crude oil import sources to ensure the security of crude oil supply and demand.

Energy Security in Danger? A Comparative Analysis of Oil and Copper Supply

This study aims to examine energy security in terms of crude oil and copper supply. While oil remains the leading energy commodity globally, copper is crucial for many new technologies, foremost for RES. Therefore, both oil and copper are extremely important for current and future energy security. This article contains a bivariate methodological approach to a comparative analysis of oil and copper supply: determining supply security with an Index of security of supply, and examines price stability with generalized autoregressive conditional heteroscedasticity (GARCH) models. This research provides evidence that there are many differences but also significant similarities between these two completely different commodities in terms of both supply security and price stability. Facing the future for RES, significant demand may cause a threat to energy security on a previously unknown scale. Therefore this instability, both supply- and price-related, appears to be the main threat to future energy security.

Advances in Upgrading Biomass to Biofuels and Oxygenated Fuel Additives Using Metal Oxide Catalysts

Increasing demand for transportation fuels, awareness of climate change, and dwindling supplies of crude oil has led to the rapid increase in production of biomass derived oxygenated fuel additives as viable drop-in fuels for potential blending with conventional fuels. The biorefinery processes for synthesis of oxygenated fuel additives using metal oxide catalysts in various forms have evolved significantly. Metal oxides exhibit diverse structures and physiochemical properties including acidity, basicity, and redox nature along with the lattice oxygen vacancies, which by careful design and modification can be tuned to optimize high catalytic activity and selectivity in several organic transformations. Metal oxide based catalysts can be designed for use in industries, as individual metal oxides or mixed metal oxides, decorated with noble and non-noble metal nanoparticles, porous metal oxides, and sulfonated metal oxides. In this review, we have attempted to consolidate the progress made with catalytic applications of metal oxides in the synthesis and production of oxygenated fuel additives through several important biorefinery processes.

Impact of horizontal mergers on supply chain performance: The case of the upstream oil and gas industry

Mergers are complex, and expected gains and success are highly dependent on different factors and drivers that affect supply chain efficiency. This paper describes a mathematical programming approach to address potential synergistic gains after horizontal mergers in the upstream Crude Oil Supply Chain (COSC). A supply chain optimization model is used to evaluate the extent to which economies of scope and economies of scale favorably impact potential mergers. The problem is formulated as a mixed-integer linear programming (MILP) model that determines the investment level and efficient implementation of operational strategies at shared services, as well as production and processing of oil and gas. A real case example from the oil and gas industry in the Middle East region is used to validate the model. The experimental studies examine three scenarios: merger under economies of scale, merger under economies of scope, and merger under the joint economies of scope and scale. Results reveal the impact of different operational strategies on potential synergistic gains. For this case study, computational results show that when only economies of scale are performed, the COSC fails to achieve the targeted cost/barrel (cost/bbl) after the merger. The joint performance of economies of scale and scope in reducing shared services costs at different supply chain echelons leads to a substantial synergy gain. It reduces the cost/bbl to below the target value.

Energy Sector in Georgia and the Export Policy of Azerbaijan’s Fuels and Hydrocarbon Resources

Georgia, deprived of its own hydrocarbon resources, relies exclusively on the import. It has abstained from purchasing those from the Russian Federation for political reasons, which, combined with the lack of LNG terminal infrastructure, has led to the factual monopolization of crude oil and natural gas supplies from Azerbaijan. For geopolitical reasons, Georgia remains the only export route for Azerbaijan for these resources. Easy access to those resources due to its position as a transit state has an impact on the tempo of energy transformation in Georgia. On the one hand, the significantly lower than expected dynamics of the development of renewable energy sources, and on the other hand, the growing role of Azerbaijani national companies in the market of liquid fuels and natural gas in Georgia, are visible consequences of the emergent status quo.

A Conditional Value-at-Risk (CVaR) approach to studying the Sustainable Crude Oil Supply Chains (SCOSCs) evolved due to change in government policies

A Conditional Value-at-Risk (CVaR) approach to studying the Sustainable Crude Oil Supply Chains (SCOSCs) evolved due to change in government policies

Production of Feather-Based Biopolymers as a Direct Alternative to Synthetic Plastics

The diminishing supply of crude oil has led the polymer industry to continue to investigate the use of alternative polymer feedstocks. Agricultural waste streams (or low-value byproducts) often contain the building blocks for biopolymer production. One potential feedstock is poultry feathers. Global poultry production currently exceeds 50 billion birds per annum and is continuing to increase. Generating more than 6 million tonnes of feathers/keratin annually, it represents a viable resource for biopolymers. A barrier to industrial adoption has been scalability. This work aims to upscale the extrusion process by adapting to a larger extruder (capable of 3+ kg/h), which will also improve mix stability. Use of this system improved throughput to 0.8 kg/h. The pellets produced were then used in secondary processing (tube and sheet extrusion) to investigate the potential for targeted applications. Analysis on water uptake, morphology, and mechanical properties was conducted to characterize feather-based polymers. Mechanical properties (tensile strength 3.6 MPa and elongation 58%) were similar to those of other biopolymers (range between 0.3 and 10.6 MPa and 2 and 85%, respectively) yet were achieved using a lower plasticizer content (24% compared to 29–40%)/higher waste loading. Results proved that feather polymers could be produced on a large scale and used to produce a range of final applications using a material containing ∼70% waste product.

Supply chain design and integration for the Co-Processing of bio-oil and vacuum gas oil in a refinery

Co-processing of bio-oil and vacuum gas oil (VGO) helps to add renewable carbon to co-processing products and decrease the production cost of bio-fuels by using refinery existing infrastructures. Designing an effective supply chain for the co-processing system of bio-oil and VGO is very important for the further reduction of the production cost. However, it still remains unclear about how to integrate and coordinate the biomass supply and the crude oil supply. In this work, a mathematical model was proposed for the design and integration of the supply chain for the co-processing system to obtain the optimal supply chain network between the biomass supply and the crude oil supply. The obtained optimal supply chain network involved collections, storages and transportations of the biomass and the crude oil. The case study suggested that each storage site should be located within the relevant village to reduce the transportation cost; that the optimal transportation mode between the collection site and the storage site was electric truck while the optimal one between the storage site and co-processing site was heavy truck; that the crude oil cost contributed more than 99% for the total annualized cost; and that the biomass transportation cost was close to the biomass cost. Sensitivity analysis was also conducted to evaluate the effects of parameters on the total cost.

Ewolucja bezpieczeństwa energetycznego Polski i Białorusi na międzynarodowym rynku ropy naftowej

Access to energy resources has become one of the main challenges of energy security in the modern world. Due to the growing political instability of countries exporting energy resources, the energy security category should be perceived in a special way. Energy security is expressed, first of all, in stable access to energy resources at an acceptable price. The aim of the article is to determine to what extent the strategy of diversifying the sources of crude oil imports to Poland and Belarus is implemented in practice, and to what extent the implementation of this strategy is conducive to building energy security for both these countries. It seems that despite the similar geological and geographical conditions, as well as the common historical infrastructure heritage, Poland and Belarus shape their energy policy differently. The conducted analysis has an empirical dimension, as the REES index is used to measure the concentration of imports and the short-term risk for the security of crude oil supplies. The article shows that a properly implemented diversification strategy significantly improves the country’s energy security, which is possible due to the use of alternative directions for oil imports to the Russian one.

Supply Chain Management: A Game Changer in the Oil and Gas industry in Nigeria: A Review of Literature

Nigeria has abundant deposit and supply of accessible crude oil and gas resources and it remains the mainstay of her economy. The oil and gas industry in Nigeria is a part of the global oil and gas market which depends on effective and efficient supply-chain management system for the seamless procurement of goods and services (domestic and international), logistics, operations and production management, warehousing, storage of goods from organisations supplier’s suppliers to the customer’s customers with the help of adequate use of modern information and communication technology. The purpose of this study was to examine supply chain management: a game changer in the oil and gas industry in Nigeria. The paper is largely a literature review, hence a desk research methodology was adopted. The paper revealed that the industry offers a classic model for changing the competition game in the sector through a lean, innovative and environmentally sustainable integrated supply chain management system, as today’s competition is no longer between organizations, but among supply chains that compete to reduce their cost of acquisition, production, logistics and warehousing along the chain while delivering customers products and services of quality at the right time, quantity and quality, at the right place and total cost, and creating value throughout the chain.

Long-term energy demand in Malaysia as a function of energy supply: A comparative analysis of Non-Linear Autoregressive Exogenous Neural Networks and Multiple Non-Linear Regression Models

Energy modeling and forecasting are key to providing insightful energy-related policy decisions that could propel positive economic growth and sustainable development. In this study, the Non-Linear Autoregressive Exogenous Neural Networks (NARX) and Multiple Non-Linear Regression (MNLR) models were employed for modeling the final energy demand per capita in Malaysia. The non-linear relationship between the time-series data such as GDP per capita, population, crude oil supply, natural gas supply, coal and coke supply, hydropower, electricity demand per capita, and the final energy demand per capita were modeled using five NARX and MNLR models refer to as NARX-1, NARX-3, NARX-5, MNLR-1, and MNLR-2. The effect of varying the network time delay and the hidden neurons on the NARX model performance were investigated. The best model configuration was obtained using 1 network delay and 17 hidden neurons. Both the NARX-1 and MNLR-1 models accurately learn the time series data for the prediction of the final energy consumption per capita. With R2 of 0.999 and 0.996 obtained for the NARX-1 and MLNR-1, respectively, the predicted final energy demand per capita was in close agreement with the actual values. Using the NARX-1 and MNLR-1 models, the final energy demand per capita was projected to be 2.3 toe/person and 2.1toe/person, respectively by 2050. The level of importance analysis of the NARX-1 models and the parameter estimates of the MNLR-1 model revealed that an increase in population and natural gas supply had a significant influence on the predicted final energy demand per capita.

Multi-Objective optimization of the Hydrocarbon supply chain under price and demand uncertainty

ABSTRACT The energy sector is known for its enormous investments, despite the erratic behaviour of the oil market (e.g. changes in crude oil prices). Therefore, strategic and tactical planning of the Hydrocarbon supply chain (HCSC), considering market uncertainty, is a significant area of research. HCSC construction involves the integration of crude oil and natural gas supply chains (SCs). In this study, a stochastic multi-objective optimization model is developed for the tactical planning of HCSC. The model considers price and demand uncertainty by formulating a two-stage stochastic programming model. Financial objectives are considered in terms of cost minimization and revenue maximization, while a non-financial objective is considered in terms of depletion rate minimization (i.e. reserves sustainability maximization). The model assists the decision-maker in quantifying the amount of production required to meet demand under different scenarios. Furthermore, the proposed model assists in evaluating the trade-offs among alternatives. A real-world HCSC is used to elucidate the practicability of the model, and some managerial insights are derived by conducting a sensitivity analysis. For instance, production can be reduced during high demand periods to maintain enough reserves, and the excess demand can be satisfied from the outside market based on medium-term contracts.

Conceptual approach for simultaneous targeting and design of refinery desulfurization solvent network

With the increasing supply of sour crude oil and rising demand of low-sulfur fuel oil products, desulfurization becomes important in refineries, leading to notable energy cost for desulfurization solvent regeneration. This paper presents the integration of desulfurization solvent network and develops a systematic targeting and design method in order to improve the overall solvent utilization. First, the desulfurization solvent sink/source and desulfurization solvent network are defined referring to the characteristics of desulfurization units. Next, a novel problem table method is developed to identify the minimum fresh solvent consumption and design the desulfurization solvent network simultaneously. A case study is conducted to provide quantitative insights in designing desulfurization solvent network and saving fresh desulfurization solvent. Such integration reduces the fresh solvent consumption by 25% and has a good practicability.

Green logistics of crude oil transportation: A multi-objective optimization approach

Crude oil logistics activities, which are mostly carried out using ships, are one of the contributors to greenhouse gas (GHG) emissions. GHG emissions from logistics activities are predicted to increase significantly by 2050, so they need to be controlled with the right logistics planning strategy. This study aims to apply the green logistics concept in crude oil transportation that considers multiple depots and heterogeneous fleets by using multi-objective optimization (MOO). This study investigates a case study of crude oil logistics to a refinery unit in 6 scenarios with single-objective optimization (SOO) and MOO cases. Each of the scenarios differs in objective functions and ship’s fuel type (i.e. diesel and LNG). Optimization is performed to select the best option of crude oil supply sources and the type of ships that carry crude oil to the refinery unit in each scenario. The results show that in MOO scenarios, the use of LNG fueled ships and optimized routes can reduce CO2 emissions and logistic costs by 27.8% and 50.6% compared to average current crude oil logistic cases. MOO scenarios with LNG ships also performed better compared to the diesel-fueled option, it can reduce CO2 emissions by 18.5% without a significant increase in total logistic cost. Furthermore, the SOO and MOO comparison shows the effect of applying green logistics by using MOO, resulting in less GHG emissions with unnoticeable change in cost.

Crude oil compatibility testing using pumping and filtration methods

According to the National Bank of Poland, by the end of 2019, oil imports to Poland amounted to 26.3 million tonnes of crude oil, where the main volume came from Russia. The need to ensure greater energy security enforces the diversification of crude oil supplies, thus the largest domestic refineries are increasing the share of supplies from different sources each year. This entails the need for continuous information on the profitability of processing new types of crude oil and potential problems resulting in increased cost. Quality control of the crude oil offered on the market helps minimize the risk of purchasing incompatible oil types by ensuring that the proposed shipment meets the relevant quality requirements. Of particular importance is the fact that such tests should be performed prior to the decision to purchase a particular crude oil and introduce it to the refinery’s installation. It often happens, however, that detailed tests are performed only after the purchase. It is important to note that testing the physicochemical properties and determining the yield of individual fractions alone is not sufficient. Precipitation of sediments in the logistic chain of crude oil is a significant problem both in pipeline installations, storage depots, and refinery installations, where crude oil containing dispersed sediments is processed. In the previous stage of work, an effective filtration method was developed to determine the compatibility of crude oils and their mixtures. Now, attention was focused on developing a new method that allowed for a faster compatibility measurement capability along with reusing samples for another measurement. The developed new method of pump compatibility testing was tested for two crude oils from different supply directions. The measurements were performed for crude oils and their mixtures at 150°C under 25 bar pressure. Compatibility of crude oils with the filtration method was used for comparison, where based on the mass of sediment separated on special filters, the allowable concentrations where hydrocarbon mixtures were compatible were determined.

Importance of trade dependencies for agricultural inputs: a case study of Finland

Approximately 80% of the world’s population lives in countries that are dependent on food imports to sustain an adequate food supply. Besides these food imports, further dependencies also arise due to the requirements for agricultural inputs, including energy, fertilisers, feed and agricultural machinery. While the trade of agricultural inputs is relatively well represented in economic analysis, the quantification is often in terms of monetary values, and thus the assessments of the actual input quantities are very limited. In this paper, we develop a framework for analysis of the traded input quantities at the country-level and demonstrate its utility through an in-depth analysis of Finland’s dependency on agricultural inputs. Further, we assess the importance of these inputs for domestic food production from a resilience perspective. We find that Finland, a country with relatively high food self-sufficiency but also a great dependency on imported agricultural inputs, experienced an increase in its dependency over the period 1996–2016. In case of trading partners, the story is more mixed: while trading partners for soybeans increased, those decreased in case of electricity while no significant change was observed in other commodities. In Finland, the rapeseed dependency on imports (ratio of net imports and consumption) grew from around 0% to almost 50% between the years 1987–2013. Changes for electricity remained substantially smaller, with dependency only slightly growing during the study period. Crude oil and soybean supplies are totally dependent on imports as neither is produced in Finland. Interestingly, the highest dependencies for agricultural inputs were on different countries than that for foodstuff imports. Thus, when identifying and assessing approaches to increase resilience to trade-related shocks, it is essential to understand both foodstuff and agricultural input dependencies within the global food system.