African refineries are struggling to extract value from digital investment

17 September 2019 2 min. read
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New analysis from Accenture has revealed that oil refineries across the globe are adopting more digital enhancements, a trend that has made its way into the South African market. Counter-intuitively, the firm also reports that returns on these investments are dipping on an annual basis.

The firm conducted a survey amongst professionals at oil companies across the globe. Nearly 150 respondents from the oil sector were surveyed, ranging from C-suite executives to engineers. The results are encouraging when it comes to investment levels in digital oil refineries, although there is meagre cause for encouragement thereafter.

While investment in digital enhancements registered an increase across the board, few are reporting returns on these investments. 11% of professionals from oil refineries reported a margin improvement of more than 10% due to digital enhancements last year, which has dropped to 3% this year.

African refineries are struggling to extract value from digital investment

When lowering the marginal improvement to anywhere between 7% and 10%, the number of refineries responding in the affirmative only increases to 11%, which is a considerable decline from 19% last year. Those reporting marginal improvements between 2% and 6%, meanwhile, fell from 46% to 38%.

The report is particularly discouraging for Africa in the current context. Most economies in the region rely on oil for a significant portion of their income, and are therefore dependent on oil prices. Investing in digital enhancements has been the ticket for most economies, not only to boost production but also to reduce dependence on prices by maximising efficiency.

Some of the largest economies on the continent still remain reliant on oil. “There is no one answer on how to best organise the integration of your information technology (IT) and operational technology, as this depends on company culture and leadership strategy.Having launched many proofs of concept, refiners must now revisit the operational processes to enable scale and pace” explains Tracey Countryman, Accenture Resources Industry X Managing Director.

Accenture Resources Africa Managing Director Cameron Tandy added, “Our clients are moving from a ‘wide-and-shallow’ experimental approach towards proof of concepts that have a laser focus on fewer initiatives, which provides a much better chance of scaling successfully and sustainably.”