Oil and Gas: Seeing the Future Clearly

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Sunday, January 17, 2021   /07:00 AM / By Proshare Research/ Header Image Credit: EcoGraphics


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Conclusion-Blue Skies Ahead 

The notion that the oil industry will suddenly disappear is wrong, but so also is the belief that oil-producing countries have time to scrape by as the world pivots to new energy sources. The reality would seem to lie somewhere in-between both outcomes.

 

Oil and gas companies will need to change their business models with less dependence on revenues from oil over the next decade while they also would need to ramp up their development of gas and its various uses in both industrial and domestic settings. With companies increasingly concerned about environmental, social, and governance (ESG) matters, the business environment will sashay towards friendlier environmental and social practices with higher emphasis placed on corporate governance and its consistent attention to best corporate practices (see illustration 7 below).


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Illustration 7: Where the Carbon Blows

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Furthermore, the digital storm is upon us. Companies will need to integrate their operations into a new digital reality that would involve data, precision, and flawless execution. The role of the CEO would not be to hive-off technical digital responsibility to the head of IT, but to gain an understanding of the role of IT in the overall new business architecture and to direct its application towards improved efficiency and market competitiveness. The O&G industry should expect a good number of collaborations and mergers in 2021 as companies get a sense of the challenges they will face over the coming months.

 

Forward-facing technology will require forward-facing management, the key managerial imperatives in 2021 in the O&G sector will be imagination, strategy, and rethinking. The O&G models of the past will have to be unlearned, the present realities will require new approaches to be learned while the future would need managerial relearning. The big industry agendas of 2021 will gravitate around the energy needs of a climate-sensitive ecosystem that disavow the clunky smokestack factories of the past.

 

The new business mindset would need to address the cost efficiencies that would make cleaner manufacturing and power generation practical and affordable. Therefore, O&G firms will have to drive operational models that cut costs, reduce time to market, and integrate horizontal and vertical value chains to deliver goods in a cheaper, cleaner, and safer manner.  This is not impossible, but it is a massive request to ask from companies that are not familiar with such levels of technological innovativeness, operational efficiency, and cost-effectiveness (see illustration 8 below).

 

Illustration 8: O&G Reimaging and Technology

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In muscling forward Nigerian O&G firms must find segments of the new technology-framed energy market to service. In a decade the oil and gas business would be unrecognizable with price determination prised from the fingers of cartels and demand and supply being driven more closely by market forces. Efficiency, effectiveness and cost-containment will be central to corporate survival. Another major factor would be technical skills and consumer-sensitivity. 


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Downloadable Version of Oil and Gas: Working the New Normal in the Time of a Pandemic Report (PDF)

1.    Full ReportOil and Gas: Working the New Normal in the Time of a Pandemic - Jan 11, 2021

2. Executive Summary: Oil and Gas: Working the New Normal in the Time of a Pandemic  - Jan 11, 2021


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Related Links from the Oil and Gas Report

  1. Oil and Gas: The Future is Gas
  2. Oil and Gas: Understanding Oil and Gas Companies By Numbers
  3. Oil and Gas: Linking Up the Dots
  4. Oil and Gas: Taking a Peek at the Pump Well
  5. Oil and Gas: Working the New Normal in the Time of a Pandemic

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