The pandemic created significant challenges for the oil and gas sector, particularly the industry majors. In addition to increased energy demand from rebounding economies, countries have been rushed for petroleum products over the past two years due to pandemic-induced supply constraints from producers. Many oil and gas firms attempt to reinvent themselves by concentrating on financial health, committing to climate change, and changing business models.
The big trend that people aren’t homing in on enough is the resiliency of the global oil and gas industry.
From December onwards, global oil production is expected to outpace demand, owing to growth in the United States and OPEC+ countries. As this upward trend continues into 2022, the United States, Canada, and Brazil are expected to pump at their highest annual levels ever, increasing non-OPEC+ output by 1.8 mb/d. If the remaining OPEC+ cuts are fully unwound, Saudi Arabia and Russia could also set new highs. Global supply is predicted to increase by 6.4 million barrels per day next year, compared to 1.5 million barrels per day in 2021.
Refinery runs are expected to rise by 3.1 million barrels per day on average in 2021, recovering only 42% of the decline seen in 2020. In 2022, throughputs are expected to increase by another 3.7 mb/d.
Global oil demand is expected to increase by 5.4 million barrels per day in 2021 and by another 3.3 million barrels per day the following year when it returns to pre-Covid levels of 99.5 million barrels per day.
In a recent article, Deloitte has listed five trends in the oil and gas industry worth following in 2022:
Oil price impacts – High oil prices boost energy transition plans, challenging conventional wisdom. After going negative in April 2020, oil prices have rebounded to roughly $80/bbl. A high oil price encourages investment in more risky and costly green energy technologies like carbon capture, utilization, and storage (CCUS).
Mergers and acquisitions – ESG play a significant role in M&A transactions. Since 2021, oil prices have been rising, aided by recovering demand and OPEC supply caps. While the lull in upstream M&A activity is primarily due to O&G companies’ ongoing capital discipline, buyers’ limited visibility into sellers’ carbon profiles or assets is becoming a growing factor.
Oilfield services – Business models shift to enable a new energy era. Integrating solutions for decarbonizing upstream projects, establishing subscription-based revenue models, and diversifying into the low-carbon space might be major enablers for the future oilfield service strategy.
Fuel retailing – Convenience and experience supersede fuel as the new anchor to attract customers.
Workforce and talent – Greener jobs and differentiated benefits can help secure return and retention of the workforce.
Centrica is a multinational energy and services company that provides cutting-edge solutions, services, and products. The company operates British Gas, Direct Energy, and Bord Gáis Energy brands, supported by 15,000 engineers and technicians.
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