The Oil industry that ended the year 2019 on a reasonably high note was hit hard in Q1 of 2020. The remainder of 2020 was just survival and an eager wait for the vaccine that would bring order to the world and a ray of revival for all sectors. The year 2021 brought vaccine and a ray of hope, and along came the revival for the Oil and Gas Industry. The revival also accelerated investments and technological developments in Sustainability, Net Zero, Decarbonisation, Carbon Capture and other green initiatives, which were mere academic topics but now are now considered as serious business opportunities. It is expected that the Brent would stabilize to $70/barrel in 2022, thus bringing a careful balance of capital discipline and investments in new sustainable opportunities (a higher oil price always brings more focus to core business and thus impeding energy transition initiatives).
With the economies across the world reviving, global oil demand is expected to reach pre-Covid-19 levels in the early 2022. The year 2022 would be transformational for the Oil and Gas Industry and would be a year of continued reckoning that brings new technologies, skills, business models and partnerships to the frontline, most importantly a year where the demand will rebound. We have seen our customers, consultants and competition build momentum on their transformational journey that follows five key trends:
1. Boost in Energy Transition: In the year 2022, after being volatile for nearly two years oil prices will start stabilizing as the demand will start going back to the pre-pandemic era. These stable oil prices would provide the capital needed to fund new and greener energy solutions, like hydrogen and bio fuels. Additionally, partnerships with renewable energy providers would continue to increase and see momentum considering Scope 1 and Scope 2 emission targets.
2. De-carbonization initiatives with Net Zero goal [Report > Reduce > Reform]: Carbon / Emission reduction has become a key performance indicator within the Oil and Gas operations which starts with a vital strategy to first measure and Report, then devise ideas towards reduction (Reduce), which is then followed by a complete transformation (Reform). Also, the need to meet Net Zero goals will be driven by investments & partnerships in technologies related to Carbon Capture, Methane Detection and other such green initiatives.
3. Energy and Operational efficiency improvements for existing Oil and Gas Assets: Given the current situation and the constantly broadening decorbonization directive across the industries, digitization of assets would be necessary to aid optimization, prediction and life extension of the existing assets. We may even witness a strong drive to maximise output from existing assets without significant capital infusion.
4. Greater adoption of Technology in every aspect of Oil and Gas Operations: To boost performance effectively and efficiently, ppartnerships with companies that bridge the divide between domain and technology would be key towards leaner and greener operations. Value driven use of IoT, data analytics and AI/ML technologies for operators to effectively analyse and implement strategies are essential.
5. Workforce Challenges: High labour cost coupled with the need to cross-skill resources towards new energy space would drive Oil and Gas Companies to rethink strategies. An advantage for the industry is that remote working has opened up avenues for cross border teams to collaborate, which were once improbable.
There are possibilities galore for the Oil and Gas industry in the year 2022, if the world economies continue to make advances towards keeping the pandemic under control. The current situation will have only a mild effect on the industry, which can be recovered soon.
Disclaimer: The views expressed in the article above are those of the authors’ and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.