The coronavirus outbreak of 2020 meant it was a year unlike any other for everyone. But commercially, the decline in travel and deceleration of industrial productivity meant the (already turbulent) oil and gas sector was impacted particularly heavily.
Indeed, Total announced revenue losses of approximately $12bn in the same year, while BP posted a record deficit of almost $18bn. And with widely circulated reports of demand for oil slumping to its lowest levels for more than a quarter of a century, it’s hardly surprising that oil prices dropped below zero barely a month after the world went into lockdown.
But while life as we knew it came to an abrupt halt, targets for longer term goals have stayed intact. The mandate for the UK to become net zero by 2050 for example, is a formidable challenge which oil and gas companies will need to address and invest in heavily to remain compliant.
Digital transformation has been identified as one of the key ways in which the sector may overcome this challenge. The process has been in train for some time already, and the majority of oil and gas organisations have taken major steps in implementing AI and machine learning, advanced analytics and robotic process automation solutions. They are yet to fully appreciate the full potential that IIoT, blockchain and edge computing have to offer, however.
It’s believed that these new digital technologies will factor heavily in improving the movement and management of data, helping to increase safety, reliability and productivity, while eradicating the legacy technology said to be inhibiting the drive to become carbon neutral.
Meanwhile, the big players within the industry appear to be taking far more revolutionary steps to ensure they hit the 2050 net zero target. Their solution? Diversification into the renewable energy market.
Equinor are one of those leading the way in this regard. They are expected to spend around $10bn on specific renewable energy products by 2025, accounting for more than half of the overall sum predicted to be invested by oil companies.
And Total are also making headway into the renewables market, having secured a 51% stake in the Seagreen offshore windfarm project. It’s understood that this particular acquisition represents a significant chunk of the £2bn per annum that Total is looking to invest in low-carbon electricity.
Like their competitors, Total is all too aware that demand for oil and gas is on a downward trajectory, and so the projected 11% ROI on Seagreen will contribute not only to recovering the deficit caused by this trend, but in recouping losses caused by the COVID-19 outbreak.
This evolution away from operating purely as oil and gas energy providers has resulted in the coining of a new classification of organisations such as Equinor and Total as ‘integrated energy companies’, or IECs. That’s according to Bernard Looney, anyway. The CEO of BP suggests that this is a response to the changing demands of the world from the point of view of energy provision, and admits that his business are also making the transition.
By 2030, BP will have reduced oil and gas production by 40% and aim to have increased their renewable energy generating capacity from 2.5GW to 50GW by upping investment in the technologies required to $5bn per annum.
It’s an altogether uncertain but undeniably exciting time for the oil and gas industry and, as providers of connectivity in the aforementioned Seagreen project, one in which I am delighted to be playing an active role at the leading edge.
Robust and reliable connectivity will be crucial to the success of this venture and all those akin that are sure to appear on the horizon. The offshore wind farm will be supplying power to more than a million homes in Scotland, and the latest in LTE and 5G technologies will be utilised to help keep the country up and running at all times.
With so much change taking place, both in terms of digital transformation and energy transition, it’s vital that oil and gas companies partner with organisations that truly understand the energy market and the demands with which they are faced.
