INDUSTRY REPORT
Players in the oil and gas sectors are struggling with declining demand , ensuring employee safety and business stability , and the need to build a flexible business model
Market challenges
“ The ongoing COVID-19 pandemic has hit every industry hard , but perhaps the one industry which has taken the biggest hit is the global oil and gas industry . The spread of this virus forced many oil and gas companies to either stop or slow down their physical operations , which impacted production in both upstream and downstream operations ,” commented market analyst , ResearchandMarkets . com
“ Perhaps the greatest and most significant impact of the coronavirus pandemic on the downstream oil market was the price crash of crude oil within a short time . On 1 January 2020 , the price of a barrel of crude oil was being sold for US $ 67.05 on the NASDAQ exchange in New York . By 15 March 2020 , this price had crashed to US $ 30.00 a barrel . Oil majors took a major hit ,” it added .
The oil price has now recovered on the hopes of a quicker economic turnaround but players in the oil and gas sectors are struggling with declining demand , ensuring employee safety and business stability , and the need to build a flexible business model that can lead to long-term resilience as the world comes out of the coronavirus crisis .
The oil and gas sector is also constantly changing . Increasingly uncertain energy policies , geopolitical complexities , cost management and climate change all present significant challenges . The demand-supply imbalance in the oil and gas industry over the past few years has had far-reaching economic and geopolitical implications for the global market .
The industry has been steadily increasing its efficiency with automation , digitisation and the Industrial Internet of Things ( IIoT ). The declining capital cost of solar and wind ; the rise in battery energy storage adoption ; disruptive start-ups contributing to competition and increases in mergers and acquisitions is expected to drive growth opportunities .
Climate neutrality goals
The International Association of Oil & Gas Producers ( IOGP ) supports the EU ’ s objective to reach climate neutrality by 2050 . It has called on policymakers to follow up on the Climate Law with an inclusive approach that promotes all available technologies and solutions equally and encourage the EU to step up its engagement with its global partners to combine decarbonisation efforts .
“ With the Climate Law , the EU sets a clear objective on the horizon . Reaching climate neutrality by 2050 will be an immense challenge for the EU , as a whole . We simply cannot afford to try and take shortcuts or to cherry pick solutions anymore . We need policymakers to help deploy all large-scale alternatives : Carbon Capture Use & Storage and clean hydrogen from natural gas will be key ,” said François-Régis
Mouton , IOGP Regional Director Europe .
To help the EU reach climate neutrality by 2050 , Europe ’ s Oil & Gas Industry has a clear way forward , said the IAOGP :
■ Reduce our carbon footprint by minimising emissions linked to the production , processing and transport of products . This includes continued efforts to reduce methane leakage and flaring , as well as the electrification of platforms .
■ Supply cleaner energy , in particular natural gas as a costeffective alternative to coal and enabler of renewable energy integration . Also investing a growing share of capital expenditure in low-carbon and renewable energies and services including wind , solar , batteries and biofuels .
■ Develop long-term carbon management solutions , in particular Carbon Capture Use & Storage which can also mitigate emissions in strategic energy-intensive industrial sectors and enable the large-scale supply of clean hydrogen by decarbonising natural gas . The pursuit of nature-based solutions are essential to tackle emissions which are too difficult or technically impossible to avoid .
Oil and gas will still provide 47 % of the world ’ s energy needs in 2040
“ If this is to be Europe ’ s ‘ Man on the Moon ’ moment , we must once again have all industrial actors working together towards the same objective . Oil and gas accounts for nearly 60 % of EU energy demand today , therefore the involvement of our sector will be instrumental to making Europe ’ s transition to a cleaner energy system a success ,” François-Régis concluded .
However , while the industry is committed to reducing emissions from its own operations , ongoing investment in existing and new oil and gas fields is necessary to meet global energy demand . Even in a
ISMR March 2021 | sheetmetalplus . com | 23