The changing strategic imperatives of the oil and gas industry


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  • Policies and measures aimed at achieving net zero emissions will have a profound impact on the oil and gas sector, both in terms of its operations as well as the demand for its products.
  • Decarbonization and the evolution of demand call on the players in the sector to reflect and, in certain cases, to reinvent their economic models and their future portfolio strategies.
  • The incumbent operators must understand their role in the energy transition and decide what to unload, where to diversify, what to optimize, what new market opportunities to target.

Businesses, industries and countries increasingly find themselves in recovery mode from the multifaceted disruptions caused by the COVID-19 pandemic. However, the health crisis is not over and uncertainty hangs over the prospects for recovery.

In this context, various forces are shaping the future of many industries – and the oil and gas sector is no exception. There are increasing demands to increase productivity, to build a more resilient industrial ecosystem and to continue to contribute to socio-economic development and well-being, while at the same time there is increasing pressure to deliver on commitments. long-term to meet stakeholder expectations through low-carbon economic transition pathways.

Some of these trends have accelerated considerably over the past year, particularly with regard to the energy transition. How does this new context redefine the strategic imperatives that will shape the future of the oil and gas industry? This article brings together these different imperatives. And in the following pieces, we’ll dive deep into each one, one by one.

According to International Energy Agency, countries that have committed to achieving net zero emissions cover around 70% of global CO2 emissions. It is likely that policies and measures in this regard will have a profound impact on the oil and gas industry, both in terms of its operations as well as the demand for its products.

First, industry needs to minimize its own emissions, so-called scopes 1 and 2. These are emissions from production, processing and logistics. An even bigger challenge, however, is related to Scope 3 emissions. These include those from when fuel is burned by users and consumers. It is important to know that Scopes 1 and 2 only account for around 20% of life cycle emissions, while Scopes 3 are responsible for the remaining 80% or so.

Second, there is an urgent need to tackle the emissions that eventually get discarded. One way to do this is to use carbon offsets, where one party pays a price for other parties to remove some of the emissions through activities such as reforestation or carbon capture. But with the offsets come their own challenges and question marks – from fragmentation, lack of global markets to the need for greater transparency. As demand for oil and gas erodes, as the cost of capital increases and carbon taxes come into play, decarbonization will be key to maintaining the support of consumers, investors and regulators.

The trend towards decarbonization of the global economy is likely to accelerate the peak in demand for oil and perhaps also for natural gas. Some analysts believe that peak oil will occur in the next few years, others that it has happened before, while some would say that demand will continue to grow for some time yet. Nonetheless, a peak in demand is on the way.

Interestingly, no analyst to our knowledge expects demand to fall close to zero in the foreseeable future, regardless of the scenario; oil and gas will retain a significant share of the energy mix and will continue to grow for non-energy uses. From personal protective equipment, plastics, chemicals and fertilizers to aspirin, clothing, chewing gum and… yes, solar panels, oil and gas are used as raw materials to produce many, many things.

Therefore, the future of demand will also be determined by consumer preferences and expectations. And here we mean not only energy consumers, but also consumers of all other goods and services. As consumers play an increasingly active role in reducing emissions and combating climate change by making more environmentally friendly purchases, better knowledge of consumption and consumers is an emerging strategic imperative for industry.

Decarbonization and the evolution of demand call on the actors of the sector to reflect and, in certain cases, to reinvent their economic models and their future portfolio strategies.

According to Accent, three different portfolio strategies could emerge:

1. The Oil and gas specialist, where companies double their costs and operational excellence, while reducing their carbon intensity. This path is likely to be chosen by national oil companies and some independent exploration and production.

2. The Energy Major, where companies broaden their focus on hydrocarbons to electrons or hydrogen. It is likely to be followed by the big international oil companies.

3. The Low carbon leader, where companies will make a full pivot to a carbon neutral future. It is likely to be followed by service companies and those with small, declining, or no oil and gas production assets.

The incumbent operators must understand their role in the energy transition and decide what to unload, where to diversify, what to optimize and what new market opportunities to target.

Leveraging digitization and data-driven decision making is another key imperative for the industry. This could help minimize its carbon footprint, increase productivity and reduce costs, as well as support new business models.

Companies in the oil and gas industry have used automation and data processing for decades. For example, two of the world’s top 10 the most powerful supercomputers are owned and used by oil and gas companies. Some analysts suggest that because of these experiences, many oil and gas companies believe they are already familiar with digital technologies and almost see themselves as digital natives.

Yet, compared to other industries, the oil and gas sector lags considerably behind. The dominant industrial culture is often suggested as a major obstacle to the advancement of digitization. Another structural reason is fragmentation and data silos – this impedes communication between different parts, functions, operators and the supply chain, greatly limiting the opportunities to fully embrace digitization.

Image: Accenture

Developing a highly skilled yet agile workforce will be essential to support organizations and the industry at large. The changing market, customer needs, the demands of digitization and the transformation of the organizational business model will force companies to acquire new skills.

Switching to clean energy is key to tackling climate change, but over the past five years, the energy transition has stalled.

Energy consumption and production contributes two-thirds of global emissions, and 81% of the world’s energy system is still based on fossil fuels, the same percentage as 30 years ago. In addition, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018, energy intensity improved 1.2%, the slowest rate since 2010.

Effective policies, private sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.

Benchmarking progress is essential for a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing the energy transition is the lack of preparedness of the world’s largest emitters, including the United States, China, India and Russia. The 10 countries with the highest preparedness scores represent only 2.6% of global annual emissions.

To sustain the global energy system, the Forum’s Shaping the Future of Energy and Materials platform works on initiatives such as system efficiency, innovation and clean energy and the Global Battery Alliance to encourage and enable investment. , innovative energy technologies and solutions.

In addition, the Mission Possible Platform (MPP) works to bring together public and private partners to continue the industry transition to put the heavy industry and mobility sectors on a net zero emission path. MPP is an initiative created by the World Economic Forum and the Commission on Energy Transitions.

Does your organization want to work with the World Economic Forum? Learn more here.

The industry will have to meet the challenge of attracting new talent. Thousands of data scientists will be needed in the energy workforce in the new digital net-zero world. Today, it will be difficult to achieve this, especially for graduates due to changing workforce preferences as well as persistent perceptions of the industry.

In addition, the industry must find a way to retain the talent it already has. At the same time, in line with upcoming changes, some talent may require re-qualification or upgrading to meet future needs.

The strategic imperatives of the oil and gas industry are changing. Over the next few weeks, we’ll take a closer look at different aspects of these changes. Stay tuned!


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