Oil and gas firms need to expand their focus beyond short-term issues such as tumbling oil prices and over supply if they are to successfully navigate the growing range of disruptive forces that will shape the industry, according to PwC’s New Energy Futures report.
In the wake of December’s climate change agreement in Paris, the momentum to replace fossil fuels with cleaner energy sources is gathering pace, and other factors, from low oil prices to geopolitical events, continue to shake the industry.
But despite these pressures, the report is clear about the vital - albeit changing - role the industry has to play in the energy transition and the opportunities for those that are able to adapt to the changing times.
Chris Bredenhann, PwC Africa Advisory Oil & Gas Industry Leader, says:
"While, for understandable reasons, the current depressed oil price dominates the headlines, it’s also important to look beyond that to consider what forces are shaping the future of the industry. US shale supply has contributed substantially to the current position – what other disruptors does the sector face?
“Global demand for affordable, reliable energy will continue to grow for the foreseeable future, but there is a new longer-term backdrop, as the world transitions to a low carbon system. Momentum to replace fossil fuels with cleaner energy sources is building, and oil and gas companies need to consider their futures in this context.”
“Time and again, successful operators have demonstrated the ability to respond to challenges by taking a long-term view, innovating, adapting and gauging major trends as they define medium-long term investment plans. And we are convinced that they can do so again.”
The New Energy Futures report proposes a framework that could help companies successfully navigate an increasingly complex and volatile global market over the next five to fifteen years. The framework evaluates four potential futures, where the level of disruption and the pace of change fluctuate:
The report explores the impact of these four future perspectives on the oil and gas value chain. It states that while various elements may play out in distinct ways across different regions, it will be increasingly vital that companies are able to demonstrate:
“Future economic development depends on solving Africa’s energy challenges. The role that oil and gas will play in these solutions will be informed by a wide range of drivers, as wells as clarity and the relative priority of governments in the competition between oil and gas and renewable energy solutions,” adds Bredenhann.
For all the uncertainty that may cloud the industry’s future, one thing is certain - the oil and gas industry has continually demonstrated resilience and innovation to adapt to a dramatically changing world.
Whatever the future may hold, the sector will continue to play a vital role in meeting our changing energy needs.