Every day, media reports strike us with new oil and gas explorations with memorandums of understanding signed to seal deals. The recent Russian military action against Ukraine gives us some key findings about the whole sector which rebounded strongly throughout 2021, with oil prices reaching their highest levels in six years.
Oil and gas explorations since the beginning of the 20th century were source of conflicts among countries as every stakeholder look to protect the shares and maximize the gains. It was not a ‘win-win’ situation after all and caused decades of tensions.
Covid 19 pandemic forced more than 100 companies to downsize their businesses and with more monetary policies tightening sharp spending cuts and project delays is going to constrain supply growth across the globe. The benchmark is that the world oil production capacity now set to increase by 5 mb/d by 2026 and we have to deal with this figure carefully as it can change in a blink of an eye
The main question here what are the winning strategies for the states seeking to maneuver such chaotic scene?. As 100USD may seem a lucrative price for the investors to reap their rewards in the beginning of the year, it lays more burden on the oil and gas sector.
Countries are adopting new technologies since the mining and extraction process, till its marketing and distribution in the market and some of them prefer to mitigate risks by focusing on one of these processes and outsource the rest which can hinder the whole production and distribution system.
Adding to the depth of the crisis in this sector, green technologies usually do not produce the desired effect of reducing carbon emissions. Many companies are required to put green technologies on their agenda which they lack the sufficient expertise and technologies. Eventually, they will introduce poor performance in the market, low quality production and revenues.
Of course, when your target to is to decarbonize by at least 40% by 2030 and pursuing efforts towards 70% by 2050, you will have to develop unique strategies and technologies to run your operations on daily basis, believing that what you cannot control today can be within reach in the future.
Development of alternative and advanced fuels and renewable energy generation technologies in line with higher inflation rates will be challenging to the research centers, laboratories and teams working on site from the technical and economic point of view.
According to KPMG, 97% agree that their ability to manage climate-related risk is important for keeping their jobs over the next five years. This requires advanced skills and flexibility in managing the process of data mining and publishing it on a regular basis to ensure that the gaps associated with the production and distribution process are filled.
The issue in this case is not only about the method of transferring knowledge from the laboratory to the working group on the site, but also in combining the theoretical and field experiences, can AI fill this gab?.
There are also cases where simulation systems cannot provide adequate field experience, especially when a fire breaks out on an oil rig and the life of the entire team is at risk. In conflict situations, we find sabotage of economic interests, as is happening now from the bombing of oil and gas exploration sites, which results in casualties.
The Houthi attacks on the UAE and Saudi Arabia are the most prominent example of this and there is no apparent code or law to prevent targeting of workers in these areas and protect their personal security.
Many of the bodies regulating work in the petroleum sector suffer from the effects of such conflicts, and the most prominent evidence of this is the National Oil Corporation in Libya.
Other examples loom in the Middle East region and Africa when military coups or natural disaster happen and the whole mining and distribution system dysfunctions.
Therefore, the political agenda has a decisive role in directing the transformation processes in the oil and gas sector to green practices, but its results will vary between governments and companies, and even in the preferences of the final consumer, who is already bearing the bill of failures that may occur intentionally or unintentionally during the transformation process.
What makes the matter more complicated is the state of the economic schizophrenia between the stimulus mechanisms presented by the international organizations to maintain the stability of the sector, as well as in terms of their ability to impartially evaluate the sector’s performance during crises.
In order to reach a logical vision of what is happening now in the world of oil and gas in terms of conflicts and stagnation, we must put the future of humanity in mind, and realize that things will not continue in this way, and that managing change must be carefully calculated and away from our personal perceptions or the resulting panic of the successive crisis.