Upstream Industry Research Articles

Heterogeneous Stock Market Reactions to COVID-19: More Hidden Mechanisms

This paper studies the heterogeneous effects of the COVID-19 outbreak on stock prices in China and its hidden mechanisms from multi perspectives. First, we confirm the recent conclusion that the spread of the epidemic has a significant negative impact on stock market returns. However, this effect is heterogeneous for different industries. In particular, stocks not only in the pharmaceutical manufacturing industry but also in its upstream industry, the chemical industry, even benefit from the epidemic. Second, we construct a fear sentiment index by using data from searching volume of COVID-19 related words and find that the fear sentiment can directly cause the stock price to fall. Moreover, the panic will exacerbate the negative impact of the epidemic on stock returns. Third, and most importantly, we demonstrate the underlying mechanisms from four firm characteristics. The results show that companies with high asset intensity, low labor intensity, high inventory-to-revenues ratio, and small market value are more negatively affected. We argue that the labor employment in state-owned enterprises is less flexible, so for labor-intensive state-owned firms, their stock performance worsens because of higher idle labor costs. Our evidence also strongly supports this hypothesis. Finally, we create a brand new index based on the WIOD input-output database to measure the relative position of an industry in the supply chain. Our findings show that companies located downstream are more vulnerable to the COVID-19 outbreak.

Comparative Analysis on the Industrial Environment of Electronic Information Manufacturing Industry between China and Japan

This paper, based on the input-output table of China and Japan, uses the method of correlation ratio to measure the inter-industry correlation intensity and conducts comparative analysis on the development scale of electronic information manufacturing industry between China and Japan, upstream and downstream correlated industries and the correlation intensity difference, in order to discuss the development strategy in the electronic information manufacturing industry in China from the perspective of industrial environment. The research has shown that: The upstream industries of China-Japan electronic information manufacturing industry contain both the traditional manufacturing industry and the productive services, and the productive services are in the majority in the upstream industries of the electronic information manufacturing industry in China and the correlation intensity is higher than that of Japan; The upstream and downstream of Japan’s electronic information manufacturing industry are obviously influenced by the government’s official business and the correlation between its downstream and high-tech industries is far higher than that of China. The core components of the upstream of China’s electronic information manufacturing industry are mainly driven by imports and the downstream terminal products are mainly promoted by export demand. Therefore, the improvement of the innovation ability of China’s electronic information manufacturing industry is inseparable from the improvement of the environment, market and policy environment of the upstream and downstream industries.

Import Competition from the United States and Employment of Chinese Manufacturing Enterprises

The escalating of Sino-US trade friction has become a hot topic widely concerned by the government and academia. The United States has frequently initiated trade disputes with China on the grounds that the Sino-US trade surplus is too large and import competition from China has robbed the employment opportunities of US. The Sino-US economic and trade relationship is the “ballast stone” and “stabilizer” of the relationship between the two major powers. It is of great significance to stabilize Sino-US economic development. China’s expansion of imports from the United States is one of the feasible ways to alleviate Sino-US trade frictions. However, the question is whether the import competition from the United States will have a negative impact on China’s manufacturing employment?To answer this question, this article examines the impact of import competition from the United States on employment in China’s manufacturing industry and its mechanisms from the perspective of enterprises and industries. The results show that: On the whole, import competition from the United States has significantly promoted the employment growth of Chinese manufacturing enterprises. Import competition from the U.S. mainly affects the employment growth of enterprises through two channels: promoting enterprise innovation and increasing enterprise markup. From the perspective of upstream and downstream related industries, import competition of the upstream industry has a significant promotion effect on the employment growth of enterprises, and import competition of the downstream industry has a significant inhibitory effect on the employment growth of enterprises; From the industry level, import competition from the United States has no significant impact on the overall employment of China’s industry.The academic value of this article is mainly reflected in three aspects: First, existing research mainly examines the impact of import competition from China on the employment of importing countries from the perspective of Western developed countries. However, there are few studies focus on the impact of import competition from other countries on employment in China. Therefore, this paper is an important supplement to the existing literature. Second, this paper not only constructs the import competition indexes of consumer goods, intermediate goods and capital goods from the perspective of heterogeneous import products, but also further constructs the import competition indexes of upstream and downstream industries, and comprehensively examines the impact of import competition from the United States on China’s manufacturing employment. Third, the conclusions of this paper can provide policy guidelines for mitigating Sino-US trade friction.

CONTRACTOR SELECTION ASSESSMENT STRATEGY IN THE UPSTREAM OIL AND GAS INDUSTRY TOWARDS GREEN SUPPLY CHAIN MANAGEMENT

Nowdays, the level of business competition in managing the upstream oil and gas industry is getting higher, therefore oil and gas companies need to improve their performance and optimize the existing resources in the company. This must also be considered in efforts to manage and save the environment, which is currently the main focus of governments and businesses to preserve the environment. In addition to internal improvements were made, improvements are also needed on the part of contractors/suppliers to support this. In this regard, this study was conducted to develop a strategy for conducting an assessment in the contractors selection/suppliers in the upstream oil and gas industry with the aim of implementing Green Supply Chain Management with the Analytic Hierarchy Process (AHP) method. This study maps the evaluation criteria and sub-criteria in the contractors selection and obtains the main criteria in the contractors selection for the upstream oil and gas industry towards Green Supply Chain Management. Results of the study obtain 6 criteria and 23 evaluation criteria in the contractors selection in the upstream oil and gas industry towards Green Supply Chain Management. The two most important criteria obtained are the Environmental criteria and the Health and Safety criteria, both of which have an assessment weight of more than 50% of the total assessment weight. The next criteria obtained are the Quality (Technical), Technical (Shipping), and Price (Quality) criteria, where these criteria are taken into account in the selection of contractors for the upstream oil and gas industry towards Green Supply Chain Management, so that the spirit of competition remains with the contractor and companies have many options contractor to achieve Green Supply Chain Management.

Global Value Chains and Productivity

The COVID-19 pandemic has led to an unprecedented collapse in global economic activity and trade. The crisis has also highlighted the role played by global value chains (GVC), with countries facing shortages of components vital to everything from health systems to everyday household goods. Despite the vulnerabilities associated with increased interconnectedness, GVCs have also contributed to increasing productivity and long-term growth. We explore empirically the impact of GVC participation on productivity in Estonia using firm-level data from 2000 to 2016. We find that higher GVC participation at the industry level significantly boosts productivity at both the industry and the firm level. Frontier firms, large firms, and exporting firms also benefit more from GVC participation than non-frontier firms, small firms, and non-exporting firms. We also find that GVC participation of downstream industries has a negative correlation with productivity. Frontier firms and large firms benefit more from GVC participation of upstream industries, while non-frontier firms and small firms benefit more from GVC participation of downstream industries. Our results suggest that policies designed to promote participation in GVCs are important to raise aggregate productivity and potential growth in Estonia.

Economic Effects of Renewable Energy Expansion Policy: Computable General Equilibrium Analysis for Korea.

This study examines the effects of renewable energy expansion policy on the Korean economy and industries using the computable general equilibrium model, which divides the power generation sector into detailed generation technologies and sources. The scenarios are set to observe the cases where the share of solar photovoltaic and wind power generation reaches 7%. The effects are examined according to differing circumstances, such as when greenhouse gas (GHG) emissions are regulated, and the funding source for renewable expansion varies. The results show that renewable expansion policies have negative effects on GDP. However, the magnitude of the GDP decline becomes smaller when GHG emissions are regulated. The expansion of renewable energy induces the growth of upstream industries which supply components for renewable generation modules. Regarding employment, the renewable expansion policy can increase the demand for labor. However, the direction and the extent of the effect vary depending on the funding source. When overlapping regulations, such as the emission trading scheme and renewable energy expansion policies, exist in the power generation sector, the renewable energy expansion policy could provide incentives for GHG emission-intensive power sources.

Composite leading indicators of economic activity: An application to the upstream oil and gas industry in Rio de Janeiro

This paper proposes a monthly composite leading indicator to anticipate turning points in the economic activity of the upstream oil and gas industry in Rio de Janeiro, from January 2002 to May 2019. Firstly, we build a database with 61 series, and categorize each of them into i) rapidly responsive to economic activities; ii) expectation-sensitive; or iii) prime movers indicators. Afterward, we remove the seasonality of the series through the X-13 ARIMA-SEATS method and use the Bry-Boschan algorithm to identify the cycles. Then, we evaluate the components’ fit to integrate the composite leading indicator through four statistical tests: cross-correlation, quadratic probability score, Granger causality, and probit. The assessment of the composite leading indicator demonstrates that it leads 67% of the peaks and 100% of the troughs in the target series (5/6 of the turning points). Furthermore, the average leading period is 8.4 months, while the median is 9 and the standard error is 2.8 months. We contribute to the literature by creating, to our knowledge, the first leading indicator for the oil and gas industry in Brazil.

Framework for accounting for tourism carbon emissions in China: An industrial linkage perspective

Understanding tourism carbon emissions and their influencing factors from the perspective of industrial linkages can inform policy-making in the development of sustainable tourism. Based on a combination of the environmental input–output (I-O) model and structural decomposition analysis, this article develops a novel framework for analyzing the industrial linkage pathways of China’s carbon emissions linked to tourism and identifying the driving factors affecting change in carbon emissions embodied in the supply chain. Results reveal that most carbon emissions linked to China’s broad-sense or narrow-sense tourism industry derive from some critical upstream industries, that is, indirect carbon emissions resulting from the intermediate production processes. Significant differences exist in the industrial linkage pathways of carbon emissions between tourism subsectors; thus, emission reduction policies for the broad-sense or narrow-sense tourism industry should be formulated based on these key interindustrial linkage pathways. The direct energy consumption intensity effect and energy structure effect are beneficial to carbon emission reduction, while the I-O structure effect reverses the effect on carbon emission reduction from negative to positive.

A historical time series for inter-industrial embodied carbon transfers within China

China has made ambitious carbon emission reduction commitments at the UN Climate Change Conference in Paris in 2015. However, the policies that have been adopted are based on the production accounting principle and are excessively concentrated in high and direct carbon intensity industries. This production-based accounting can lead to unfair responsibility for emissions reduction, mismatch in economic development, and carbon leakage. Embodied CO2 emissions depict the accumulated emissions generated in the production process of a product, and it is based on the consumption accounting principle. This accounting method addresses some shortcomings on production responsibility, thus providing a new perspective for carbon emission reduction. Based on 1992–2012 input-output tables and direct carbon emissions of China, this study calculated the embodied carbon transfer within 28 industries. A visualized dynamic embodied carbon database was constructed, covering all industries in China within a 20-years period. We characterized the embodied carbon transfer structure among different industries in China. The main embodied carbon input and output sectors were identified, and targeted industry emission reduction recommendations are provided. The power industry (an upstream industry), and the construction industry (a downstream industry) were considered typical net export and import industries. These sectors are suitable for formulating emission reduction policies from their respective supply and demand sides. The chemical industry is in the middle of the industrial chain, where the input and output are equal. Therefore, policies that affect both supply and demand can achieve better results. This paper provides detailed data to support China’s overall arrangement of industrial carbon emission reduction.

Non-Oil Revenue and Economic Growth in Nigeria

This study examined the effect of non-oil revenue on economic growth in Nigeria. The four specific variables proxy for non-oil revenue are: Value Added Tax, Companies Income Tax, Personal Income Tax and Custom & Excise Duties, while Gross Domestic Product was used to represent economic growth in Nigeria. The study population consists of all individuals, corporation soles and corporate organisations whose taxes were paid to the Nigerian government except firms operating in the upstream industry. The study sample consists the entire population of study using the census sampling approach. The secondary source of data collection method was used in generating data from the Federal Inland Revenue Service Statistical bulletin of 2018 and the National Bureau of Statistics of 2019 for the period 1994-2018. The descriptive statistics and Ordinary Least Square (OLS) regression techniques were used to analysed the data collected. The study findings revealed that indirect taxes (Custom & Excise Duties and Value Added Tax) have more significant positive effect on the Nigerian economic growth than direct taxes (Companies Income Tax and Personal Income Tax). Also, direct taxes have significant but negative effect on the Nigerian economic growth, especially in the long run. It is therefore recommend that simple and transparent tax laws be enacted to regulate the tax regimes in Nigeria in order to avoid any form of illicit strategic tax behaviour by management. Also, the problems of implementation of good tax reforms policies should be eliminated. Tax authority should provide strategies to strengthen the control on the significant variables identified in this study analysis. Keywords: Tax revenue, economic growth, gross domestic product, direct tax, indirect tax. DOI: 10.7176/RJFA/11-8-10 Publication date: April 30 th 2020

Smart sensor based distillation for fractionating citronella oil: current research challenges

Citronella oil is one of the essential oils derived from the leaves and stem of lemongrass (Cymbopogon nardus). At present, most of the lemongrass oil industry in Indonesia is still in the form of upstream industries which only provide crude purified oils with low purity for export with a fairly low sales value. Technology in improving the purity of citronella oil needs innovation in following the development of the industrial revolution 4.0. This article presents an overview of the research opportunities in the development of distillation for fractionating citronella oil referring to automation of optimization processes in the vacuum fractional distillation accompanied by inspection of the quality of essential oil isolation run in the line process based on smart sensors integrated in a computer program. The combination technique of quality control of essential oils in line process system combined with the optimization technique of the vacuum fractional distillation process has not been studied by advanced researchers. Therefore, this study has a state of the art process engineering and smart sensor-based quality control systems that can be developed for strengthening the Indonesian citronella oil industry.

Upstream Digitalization Is Proving Itself in the Real World

At its most basic, digitalization is about creating value from data. For the upstream industry, where even a 1% improvement in efficiency or production can drive huge financial results, there is no question that the size of the digital prize is huge. So are the challenges. “The demand people increasingly make now when presented with … digitalization … is, ‘prove it works,’” said Gareth Smith, head of consulting for Sword Venture. “They want to see solid examples of real value, not just a Power-Point promise.” And, that is starting to happen at growing scale. There is a reason that 92% of survey respondents for DNV-GL’s 2020 oil and gas industry outlook said they expect to increase or maintain levels of spending on digitalization in 2020: Digital technologies combined with data-driven insights are transforming operations, improving efficiency, boosting agility, and enabling strategic decision-making at numerous points along the E&P value chain (Fig. 1). For example, scaling digital solutions across Equinor’s global portfolio faster than expected delivered cash flow impact of more than $400 million in 2019—primarily from earlier startup of Johan Sverdrup and increased uptime on assets connected to its integrated operations center—and enabled the company to increase its 2025 efficiency improvement ambition from $2 billion to $3 billion. Using the Cloud To Turn Big Data Into Smart Data One of the key enablers of data-science-driven technologies for the industry is its ability to convert big data into “smart” data, said Vural Sander Suicmez, Middle East region manager for QRI. The ability to not only feed data into the cloud, but also retrieve information from it, makes it possible to conduct analytics that add a layer of insight on top of the data. “The cloud is opening all sorts of opportunities to do data analytics on it, and not just from a single facility, where most of our work is done today, but globally,” said Ed Moore, senior technologist for Chevron’s Emerging Technologies Group. “Looking at a larger sample size can provide new insights about how to operate.” Since August 2019, Chevron has leveraged edge computing and data analytics to directionally drill more than 3 million ft remotely in its Mid-Continent business unit and is now using remote drilling for 100% of its directional drilling in the unit. The company is also using predictive analytics with either artificial intelligence (AI)-based algorithms or first-principle engineering models to monitor its wells in remote locations and to know earlier and respond faster if they start to lose production. Predictive maintenance with digital twins. “Digital twin is a broad term,” explained Moore. “The engineering version of digital twin is an example of AI that allows us to simulate how a piece of equipment is working. This helps us determine when the equipment will start to not operate as efficiently as needed, which in turn helps us schedule maintenance to maximize the life of the equipment while saving downtime,” Moore said. Through a partnership with Emerson and Microsoft, Chevron is applying the engineering digital twin concept to extend the life of its heat exchangers to a major turnaround. The exchangers are designed with software that embeds all the engineering aspects, then tells how much heat they can exchange, based on engineering thermodynamics.

Exposure of belt and road economies to China trade shocks

This paper uses international trade data to assess the degree of exposure of Belt and Road economies to China trade shocks. It finds that the growth of China's trade following its internal transformation and accession to the WTO significantly impacted the export performance of Belt and Road economies in the period 2000-2015. The increase in China's imports significantly boosted the exports of these economies. However, this effect was attenuated by increased competition from China in export markets. The effects of China's demand shocks were stronger in more upstream industries, while those of competition shocks were stronger in industries that produce goods that are closer to final use. The effects of competition shocks were also relatively stronger in countries that are relatively poorer and geographically closer to China. Building on these findings, the paper documents the current degree of exposure of Belt and Road economies to China trade shocks.

Production efficiency and self-enforcement in value-added tax: Evidence from state-level reform in India

This paper studies the impact of replacing sales tax by value-added tax (VAT) on production efficiency and informality among Indian states. We disentangle the production efficiency gains caused by removing the distortions of sales tax from the increase in enforcement caused by VAT’s input refund system and show that heterogeneous effects of these two aspects of the reform depend on input-output linkages. While production efficiency is larger in downstream industries with backward linkages to a chain of input suppliers, the increase in tax compliance is larger in upstream industries that are forwardly-linked with many businesses as customers. To identify these mechanisms, we exploit exogenous variations in the timing of VAT adoption across states and in input-output linkages between industries.

Advanced development in upstream of petroleum industry using nanotechnology

Abstract Nowadays, energy supply is one of the most important issues due to limitation of oil, gas and coal sources. Because of rapid population, civilization and energy consumption growth, the improved technologies to make optimal use of the sources, solving related problems and finding new energy sources are important. More than 10 years ago, nanotechnology as one of the most important technologies has also been applied to progress in the oil and gas industry (upstream, midstream and downstream). The experience of these years has shown that application of nanotechnology in the oil industry improves the exploration of crude oil and natural gas (underground or deep water), drilling and bringing the crude oil or raw natural gas to the surface, as well as transportation, storage, processing and purifying methods. Nanoparticles with high specific surface area, pore volume and small size show unique physical and chemical properties, which could be applied in several applications. In this regard, many researchers have been focused on various nanoparticles for upstream industries and studied their potential in oil exploration, drilling, production and enhanced oil recovery (EOR). Also, in downstream and midstream which involve refining of crude oil, processing and purifying of raw natural gas, transportation and storage of crude or refined petroleum products, the nanomaterials have been used to improve the quality of oil and make it appropriate for the environment. Lowering sulfur gasoline, enhancing the octane number and coating the transportation system are among the goals that have been achieved successfully using nanotechnology. In this work, various types of nanoparticles such as metallic, metal oxide, hybrid nanoparticles, carbon nanomaterials, nano-composites and their applications in oil upstream industry are reviewed. Also, their usage in different types of oil upstream processes is discussed.

Maintaining Seismic-Focused Exploration During Downturn Yields Benefits

This article, written by JPT Technology Editor Judy Feder, contains highlights of paper SPE 197213, “New Growth in an Old Basin: Successful Implementation of PDO’s Exploration Strategy in a Downturn,” by Nicholas Feast, Salim Rawahi, and Mohammed Mazrui, Petroleum Development Oman, prepared for the 2019 Abu Dhabi International Petroleum Exhibition and Conference, Abu Dhabi, 11–14 November. This paper has not been peer reviewed. A conventional industry approach is to curtail seismic activity during a downturn, focusing on limiting new exploration and drilling production wells instead. This paper demonstrates how maintaining investment in high-quality 3D seismic during the last downturn, together with selective exploration, quality geoscience, application of new technologies, and efficiently maturing discoveries to early cash flow, was successful in sustaining future production while deploying capital efficiently. Challenge in Oman Block 6 Investment in 3D seismic does not contribute to immediate cash flow and, when funds are scarce, is an early candidate for cost reductions. By mid-2014, the seismic sector was the worst-performing segment in the upstream industry. However, without continued investment in seismic, future exploration success is threatened. This poses a dilemma for energy companies as they balance short-term cash flow with long-term value generation. Petroleum Development Oman took the opposite approach in the mature Oman Block 6. The company reduced short-term exploration drilling and testing and focused on early production from near-term exploration plays for early monetization to partially fund exploration. It used recently acquired seismic data to pursue highly ranked exploration opportunities. Finally, it sustained investment in, and improved efficiency of, advanced seismic acquisition and processing to improve cost efficiency for future plays. Nevertheless, success through both oil and gas exploration was achieved. Enhanced short-term cash flow and improved capital efficiency resulted while significant commercial oil and gas volumes were discovered. During 2016–2018, 1.3 billion BOE were discovered, primarily in subtle and stratigraphic traps, and over 22000 km2 of new 3D wide-azimuth (WAZ) seismic was acquired (Fig. 1). The complete paper presents case studies from the Shammar, Mabrouk North East, and Rakid plays. Focused activity in the Shammar play added volumes while early hookup and production provided cash flow, repaying all Shammar drilling and testing costs within a year. A success rate of 100% in Mabrouk North East exploration and appraisal wells proved the potential of better seismic imaging in pursuing more-complex stratigraphic traps in deep reservoirs. Early monetization focus while implementing new seismic acquisition techniques with fast processing turnaround also opened new play potential. Discoveries in the Rakid field’s Permo- Carboniferous Haushi reservoir between 2016 and 2017 delivered ultimate recovery of more than 80 million bbl through imaging of truncations beneath Nahr Umr sealing shales. These low-unit-technical-cost developments are under accelerated development programs with follow-up potential. In two of the case studies, the authors credited strongly integrated exploration, development planning, well and facility engineering, and operations teams collaborating from early in the project with allowing maximum value to be realized. In addition to the case-study plays, success was also achieved in exploring core and increasingly creamed plays (this term refers to a situation in which exploration has “creamed off ” the best prospects first, leaving more-challenging prospects), in which rejuvenation using new 3D seismic resulted in several discoveries and followup opportunities. Improved seismic quality in a mature basin continues to add value through enabling new discoveries from old ideas. Thus, the strategy of maintaining investment in seismic during a downturn—with a focus on stratigraphic and subtle traps—and achieving cash flow from early production has proved to be a solid basis for future success.

FOREIGN PRESENCE AND INDONESIAN FOOD INDUSTRY PERFORMANCE

This paper analyzes the influence of foreign presence on the performance of food industry in Indonesia using panel data from 28 subsectors in the period of 2011-2015. The data used is the Annual Survey of Large and Medium Industries (IBS) from Statistics Indonesia. The performance indicator utilized is the price cost margin (PCM). The PCM model was estimated using regression and tested with the Hausman statistical test. The results show that foreign presence increases the performance of Indonesia's food industry. Other factors that affect the industry's performance are industry concentration, market growth and imports of raw materials. Foreign presence, concentration and market growth have a positive effect on performance, meanwhile import ratio has a negative effect. The government needs to continue to encourage foreign investment in the food industry since the presence of foreign presence will improve industrial performance. In addition, efforts are also needed to supply quality raw materials by encouraging the development of domestic upstream industries.

Intermediary Governance Mechanism of Collaborative Innovation in Green Building Industry, University and Research

Green technology is the dominant technology. The collaborative innovation of green building, industry, university and research must attach great importance to the industrialization of green technology in the upstream industry, which is of great significance to the economic development under the new normal. The research content and methods based on market orientation and production-use cooperation are still limited to framework and experience research. The research on bilateral collaborative innovation cooperation mode and contract governance of upstream and downstream enterprises that touched on the core issues of “production, study and research” has not been carried out in depth. Taking the collaborative innovation of production, research and research in green building as the research module, this study conducts in-depth research on the lack of design intermediary innovation in the technology supply side (green technology production enterprise) and technology demand side (green construction project owner). This paper proposes a bilateral collaborative innovation network structure with industry-university-research and engineering innovation functions.

Downstream offshoring and firm‐level employment

AbstractWhen engaging in offshoring, firms import not only intermediates they used to produce in‐house but also intermediates they previously sourced from non‐affiliated domestic suppliers. This leads to a negative demand shock for the latter. We label this demand shock “downstream offshoring” and develop a novel measure capturing its extent for a firm in a given upstream industry. According to our instrumental variables estimations for a rich sample of Belgian manufacturing firms for the period of 1997 to 2007, downstream offshoring has a robust negative effect on employment.

Climbing the Rungs of the Quality Ladder: FDI and Domestic Exporters in Romania

Abstract This article argues that inflows of foreign direct investment can facilitate export upgrading in host countries. Using customs data merged with firm-level information for 2005–11, it shows a positive relationship between the quality of products exported by Romanian firms and the presence of multinational enterprises (MNEs) in the upstream (input-supplying) industries. Export quality is also positively related to MNE presence in the downstream (input-sourcing) industries and the same industry, but these relationships are less robust. These conclusions hold both when the product quality is proxied with unit values and when it is estimated following the approach of Khandelwal et al. (2013).