Future of the Oil and Gas Industry: Balancing Uncertainty
Future of the Oil and Gas Industry: Balancing Uncertainty
After a solid profitable year, what is next for the future of the oil and gas industry? What are the best ways to balance Net Zero goals, pressure to be profitable and the global uncertainty?
2022 was a year of record profits for the oil and gas industry - a year in which Russia's war on Ukraine collided with the post-pandemic economic recovery to drive oil prices to their highest levels in history. While the future remains uncertain due to geopolitical and macroeconomic fluctuations, most oil and gas companies have surplus profits to invest in strategies in 2023.
This is particularly critical since the industry has been facing with the tough challenge to find the right balance between sustainability, reliability and affordability – the energy trilemma, a term referenced by the World Energy Council - while dealing with the pressure to reduce greenhouse gas (GHG) emissions and to achieving the goals of the Paris Agreement.
Oil and gas companies have been proficient at delivering the fuels that form the foundation of today’s energy system; the question they now face is whether they can help deliver the energy in a sustainable and profitable way through digital transformation[1].
Many of the large oil and gas companies have already started major investment in carbon capture and other carbon reduction strategies, but much more is still needed. Rystad Energy and Wood Mackenzie[2] both issued recent studies pointing out that the world has experienced an enormous structural shortage of investment in the finding of new oil reserves since 2014, a shortage measured in the hundreds of billions of dollars. That lack of adequate investment will almost certainly cause supply shortages soon if global demand continues to rise, as seems almost certain.