The oil and gas industry has been always a story of boom and bust, but times might be changing. We are now entering an era of major social, technological, and political trends that could reshape the environment in which oil and gas companies operate. Optimism regarding resource abundance and profound technological innovations are leading to sustained lower oil prices and a focus on cost, efficiency, and speed.
The mantra of “digital oil and gas” is leading to a culture of cost control, which is, in turn, providing more long-term security to an industry that previously had tended to blindly ride the waves and duck the dips. For the past three years, we have been in a price “dip” and with large macro themes such as electric vehicles and shale gas prevailing, there is no indication that high prices are again around the corner.
Strong economic growth means rising living stands. Around the world, the middle class is expected to more than double by 2035. This will drive an increase in energy consumption, as more people gain access to vehicles, better healthcare, and modern technologies. All economic energy sources are needed to meet this considerable demand growth, and oil and natural gas is expected to supply more than 50% of the world’s energy needs up through 2040.
The first and most important challenge that oil majors are facing these days is growing supply chain complexity, with ever-growing network consolidation and restructuring combined with greater dependency on third parties across the value chain.