A multi-objective model for an integrated oil and natural gas supply chain under uncertainty

Ahmed M. Ghaithan*, Ahmed M. Attia, Salih O. Duffuaa

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

The oil and gas networks are overlapped because of the inclusion of associated gas in crude oil. This necessitates the integration and planning of oil and gas supply chain together. In recent years, hydrocarbon market has experienced high fluctuation in demands and prices which leads to considerable economic disruptions. Therefore, planning of oil and gas supply chain, considering market uncertainty is a significant area of research. In this regard, this study develops a multi-objective stochastic optimization model for tactical planning of downstream segment of oil and natural gas supply chain under uncertainty of price and demand of petroleum products. The proposed model was formulated based on a two-stage stochastic programming approach with a finite number of realizations. The proposed model helps to assess various trade-offs among the selected goals and guides decision maker(s) to effectively manage oil and natural gas supply chain. The applicability and the utility of the proposed model has been demonstrated using the case of Saudi Arabia oil and gas supply chain. The model is solved using the improved augmented ϵ-constraint algorithm. The impact of uncertainty of price and demand of petroleum products on the obtained results was investigated. The Value of Stochastic Solution (VSS) for total cost, total revenue, and service level reached a maximum of 12.6%, 0.4%, and 6.2% of wait-and see solutions, respectively. Therefore, the Value of the Stochastic Solution proved the importance of using stochastic programming approach over deterministic approach. In addition, the obtained results indicate that uncertainty in demand has higher impact on the oil and gas supply chain performance than the price.

Original languageEnglish
Pages (from-to)3427-3446
Number of pages20
JournalRAIRO - Operations Research
Volume55
Issue number6
DOIs
StatePublished - 1 Nov 2021

Bibliographical note

Publisher Copyright:
© The authors. Published by EDP Sciences, ROADEF, SMAI 2021.

Keywords

  • Multi-objective optimization
  • Oil and gas supply chain
  • Optimization under uncertainty
  • Pareto efficient solution
  • Tactical decision making

ASJC Scopus subject areas

  • Theoretical Computer Science
  • Computer Science Applications
  • Management Science and Operations Research

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