Petroleum supply chain planning under environmental regulations: a case study in Libya

Abstract

Today, petroleum companies cannot be competitive and efficient without considering potential solutions provided by sustainable supply chain management (SSCM) optimization models. SSCM can solve different challenges faced by this sector. Academics and practitioners consider the opportunities offered by decision-making tools for planning sustainable petroleum supply chains. Therefore, the primary objective of this study is to understand the evolution of sustainable supply chain planning in the petroleum industry and how to develop a data-driven decision-making tool to assess different transformation plans for the petroleum sector under the uncertainty of environmental regulations This study aims first to understand the evolution of sustainable supply chain planning in the petroleum industry and highlight the specificities of the body of knowledge in this area and develop a general framework. A mathematical model for planning and optimizing the petroleum supply chains from the country-level perspective considers the economic side. A deterministic mathematical model is presented to identify the decisions related to the flow between nodes, production capacities at each level, and how to satisfy the demand to maximize the profit from local and international markets. The developed model was solved by using commercial software. Furthermore, the Libyan petroleum case study is applied as an example to show possible improvements in the petroleum supply chain application, visualize the new supply chain configuration, and validate the results. Results show that the model allows improvements in both profit and service level if suitable production and distribution decisions are set. Finally, the optimization model helps decision-makers identify the production and distribution plan under some risky events. Introduction of new environmental regulations to decarbonize the petroleum sector, also, prepare a transformation plan (strategic decisions) for the petroleum sector. The objective is to minimize the crude, refinery, and petrochemical sectors total cost and meet environmental standards and regulations. It presents a deterministic mathematical programming model for planning the supply chain. Furthermore, the study examines the impact of incorporating investment decisions through different carbon emission reduction options and evaluating the supply chain performance based on the economic and environmental dimensions. A data-driven and generic decision-making model for eco-efficient supply chain planning is presented to evaluate the impact of introducing a stringent environmental regulation limiting greenhouse gas emissions. Experimental results based on the Libyan petroleum industry are analyzed and demonstrate model capabilities to deal with the trade-off between the total cost and the petroleum sector's environmental issues. A sensitivity analysis is carried out on some parameters to design a mitigation plan to manage the environmental risks. This study shows that it's possible to achieve up to 32% carbon emission reduction if the carbon capture and storage projects are implemented in the different petroleum sectors. However, suppose the cumulative carbon reduction objective is more than 32 % for the next 20 years. In that case, it will be necessary to implement green (solar) energies to be used in the extraction, refineries, and petrochemical plants.

Date	5 Jul 2021
Original language	American English
Awarding Institution	École de technologie supérieure
Supervisor	Amin Chaabane (Supervisor)