A safe and reliable logistics system is an important aspect of the oil and gas industry. The manufacturing and consumption geography of the hydrocarbon sector is mostly separated, therefore the oil and gas logistic has its part in the efficient, competitive and sustainable market development of the midstream industry.
Chemical logistics are generally responsive, supple and adaptable; providing innovative services to respond to market changes swiftly.
The resilient growth of the oil and gas market and shifting of the hydrocarbons processing segment from its traditional centres to the Asia Pacific and Middle East regions, has boosted the global energy logistics market over the years. With growing infrastructure and development of new industrial locations, coupled with surging urbanisation in the developing countries of Asia Pacific, has raised the demand for an organised, integrated and efficient upstream as well as downstream supply chain. The hydrocarbons logistics market in the conventional hubs is heading towards maturity and the growth is mainly anticipated from the emerging logistical centres in the Middle East region.
Based on the different type of logistic services, the global hydrocarbons logistics market can be segmented as pipelines transport, rail transport, road transport, intermodal transport, sea transport and barges. The sea and road transportation-based oil and gas logistics supply chain, grasped the largest market share in 2013. The marine transportation-based logistic segment is expected to witness the highest growth during the 2015-2021 period.
In recent years, vast sums of money have been invested in the transport infrastructure by governments right across the Middle East, in an attempt to diversify their oil and gas revenues-dependent economies.
A recent example is the King Abdullah Economic City Port in Saudi Arabia, which began operations in January 2014. The port, up the coast from Jeddah in the Red Sea, has a capacity of 1.3mn twenty–foot equivalent units (TEUs) and this is expected to rise to 4mn TEUs by 2016, 7mn by 2018 and ultimately 20mn. The developers, Emaar Economic City, hope that the port will turn into a global hub, in much the same way as Dubai or Abu Dhabi in the Gulf. As 25% of the world’s trade passes through the Red Sea on the way to the Suez Canal, there may be some justification for this aspiration.
Trends toward a hybrid mode of business, particularly with impact of the many mergers and acquisition activities happening in the global oil and gas market, has boosted the energy midstream segment. Moreover increasing clustering of the chemical industry in Asia Pacific, has led to a change in the global trade pattern and opened new opportunities for supply chain management through suppliers via manufacturers to consumers. The development in the field of cross-functional supply chain management system is providing new opportunities for the oil and gas logistics market.
The Asia Pacific region is touted to be the largest market for energy logistics, followed by North America, Europe and the rest of the world (RoW). Asia Pacific and the RoW (which includes Latin America, the Middle East and Africa) are two of the fasted growing hydrocarbons logistic markets of the world.
Country-wise, China and the US are two of the largest regional chemical logistic hubs. However, the upstream oil and gas logistics segment, such as the pipelines-based network, had the highest market share in the RoW zone, particularly the Middle East region, attributed in large part to the mammoth hydrocarbon exploration and production facilities it boasts of. The downstream logistic supply chain in Asia Pacific is increasing at a double digit growth rate owing to the economic rise and strengthening transportation infrastructure in this region. The downstream chemical logistic market is expected to witness highest growth in Asia Pacific during the forecasted period.
There is no doubt that in the short-term, the Middle East will benefit from improving economic conditions in Europe as well as solid growth in domestic economies. Investment has also helped fuel the growth, especially in the Gulf countries such as Saudi Arabia, where GDP has remained stable despite low oil prices. However, what will be just as important for the long-term is the rise of the Middle East, especially the GCC economies, as a logistics hub for Africa, Central Asia and the Indian sub-continent.
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