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More and more oil and gas companies are turning to renewable energy technology

More and more oil and gas companies are turning to renewable energy technology

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OSLO: A new study released by DNV GL reveals that the oil and gas industry plans to boost investment in the energy systems of the future this year as companies seek long-term transformation.

A record two-thirds of senior oil and gas professionals say their organization is actively adapting to a less carbon-intensive energy mix in 2021, up from just 44% in 2018. Some 57% plan to increase investments in renewable energies, compared to 44% last year, about half expect to increase investment in green or carbon-free gas.

Only a fifth (21%) say they will increase investment in oil projects in 2021, as the industry increasingly accepts the idea that global oil demand has peaked or will do so in the short to medium term. . The forecast for increased investment in natural gas remains stable at 37%.

The majority of seasoned oil and gas professionals expect these investment changes to lead to a broader overhaul of the industry. Eight in ten (78%) believe there will be increased consolidation in the coming year, up from 64% a year ago. Strategic reorientation may also involve sales of assets and businesses, with 63% expecting more splits, divestitures and spin-offs, up from 46% last year.

The transformational investments come despite a collapse in confidence in the growth of the industry following the Covid-19 pandemic and the oil and gas market crash that followed. Only 39% of oil and gas professionals are confident about the industry’s growth in 2021, up from 66% last year.

Turmoil and Transformation, DNV GL’s outlook for the oil and gas industry in 2021, suggests that priorities are shifting as investors reassess the risks of financing oil and gas projects, and governments and industry invest billion in green recovery strategies after the Covid-19 pandemic. The research is based on a survey of over 1,000 senior oil and gas professionals and in-depth interviews with industry executives.

“Net zero climate policies began to proliferate in 2020, from Europe to China, and have been put on the table in the United States. Long-term net zero policies have the potential to lead to a profound decarbonization of the global energy system, and they are already changing the direction of the oil and gas industry, ”said Remi Eriksen, Group Chairman and CEO of DNV GL .

The oil and gas industry is going through its third major recession in 12 years, but the outlook for 2021 is influenced by the possibility that this recession will be different from those of the past. Perhaps the most important difference for the industry for 2021 is the shift of capital away from fossil fuels.

“Financial markets – through the effects of the Covid-19 pandemic – have seen what peak oil demand could look like and are increasingly taking into account the shift in societal sentiment towards a carbon-free future. Decarbonization has moved from something on the horizon to an immediate priority, and there are signs that our sector could invest to transform rather than to emerge from the current crisis, ”said Eriksen.

Cutting costs will remain a universal priority (96%) for 2021, but the industry is already thin. 63% of them say their organization will still make acceptable profits if the price of oil averages between $ 40 and $ 50 per barrel in 2021. However, there are signs that traditional methods of cutting costs are reaching their limits .

“The problem with the profitability levers available in the industry is that most of them have been pulled …

Source: bollyinside
Anand Gupta Editor - EQ Int'l Media Network