Multi-Objective optimization of the Hydrocarbon supply chain under price and demand uncertainty

The energy sector is known for its enormous investments, despite the erratic behaviour of the oil market (e.g. changes in crude oil prices). Therefore, strategic and tactical planning of the Hydrocarbon supply chain (HCSC), considering market uncertainty, is a significant area of research. HCSC construction involves the integration of crude oil and natural gas supply chains (SCs). In this study, a stochastic multi-objective optimization model is developed for the tactical planning of HCSC. The model considers price and demand uncertainty by formulating a two-stage stochastic programming model. Financial objectives are considered in terms of cost minimization and revenue maximization, while a non-financial objective is considered in terms of depletion rate minimization (i.e. reserves sustainability maximization). The model assists the decision-maker in quantifying the amount of production required to meet demand under different scenarios. Furthermore, the proposed model assists in evaluating the trade-offs among alternatives. A real-world HCSC is used to elucidate the practicability of the model, and some managerial insights are derived by conducting a sensitivity analysis. For instance, production can be reduced during high demand periods to maintain enough reserves, and the excess demand can be satisfied from the outside market based on medium-term contracts.