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Abstract
Because of the dynamic nature of operating environments so prevalent in twenty-first century systems, oil and gas supply chains have become more global and complex. Thus, oil and gas supply chains (OGSC) are often vulnerable to a diverse range of risks throughout all stages from upstream to downstream. To offset the challenges stemming from a diverse range of risks, this paper identifies the resilience enhancement features of oil and gas supply chain against the backdrop of resistant, absorptive and restorative capacity. The resilience enhancement features are further quantified to assess the overall resilience of the oil and gas supply chain using a Bayesian network. Bayesian network is a probabilistic model used to assess risk under uncertainty and demonstrate causal relationships among the quantitative and qualitative variables, thus allowing practitioners to understand the interdependencies among the variables and the extent to which change in one variable affects the others. Quantification of the resilience is further analyzed by belief propagation techniques to provide better insight regarding the result of the model.
Keywords
Supply chain risks; oil and gas industry; Bayesian network.
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1.Introduction and Related Research
In a global supply chain, organizations are increasingly getting involved with their suppliers and distributors, which are geographically dispersed across regions and countries. The oil and gas industry, which is a part of an extended global supply chain, is comprised of upstream and downstream operations. The upstream elements include the process pertaining to exploration and production whereas refining, transportation, and distribution are the mainstays of downstream operations. As every oil and gas company strives to expand its market share and achieve cost advantage among its competitors, it embraces different strategies to achieve that purpose such as outsourcing and offshoring [1]. Therefore, oil and gas supply chains became more vulnerable to different forms of risks than ever before. The supply chain network of this highly complex industry often subjected to various types of risks, including, but not limited to, natural disasters, political instability, cyber-attack, piracy, terrorism, and wars. Therefore, companies in this industry tempted to take required measures to ensure effective and seamless operation through the entire supply chain network.
Briggs et al., [2] investigated the risks in the upstream oil supply chain and suggested some...