Oil and Gas Consulting

The oil and gas market is often subject to tumultuous fluctuations in value and historically it has successfully navigated its way through the challenge. However, in these testing times suddenly the market seems rife with uncertainty. With the impact of COVID-19 yet to be fully realized, we take a look at the market outlook and how oil and gas firms may look to re-strategize to deal with exceptional circumstances.

Oil & Gas Market Evaluation

Since the start of the pandemic, revenues across the oil and gas exploration and production (E&P) have plummeted. Prior to this, forecasted revenue for the industry in 2020 was $2.35 trillion. Instead revenues fell by a staggering 40%.

E&P revenues are now set to stand at $1.47 trillion for this fiscal year. A demand loss of 9.3 million barrels per day (bpd) in 2020 has also been reported as per the International Energy Agency.

Suffice to say this was a shock to major firms across the sector. It is volatility such as the above which makes it difficult to assess market valuations in the coming years, particularly given recent trends. The international energy agency has made three separate forecasts based on likely scenarios that we may face in the future.

The first is based on their forecast from 2019 and considers the least amount of change to the energy mix and current market trends. As things stand this scenario would seem optimistic on behalf of the oil and gas industry.

The second scenario takes into account stated policies from governing bodies across the globe, be it carbon emission pledges or sustainable energy initiatives.

The third makes predictions if there were to be significant development in sustainable energy systems, technologies and commitments. All of the above factors could have substantial impacts on the size of the market by 2040.

COVID Impact on Gas and Oil

Short term supply and demand have had damaging effects on the industry as a whole since the pandemic started. A surplus of supply and a sharp drop in demand are two major contributing factors. Gas demand for example, is at an estimated 5-10% lower than pre-crisis predictions. The demand and supply imbalance is exasperating the effects of ongoing oil price wars. The pandemic’s effect on demand as well as the decisions from the OPEC+ group on production, large production disruptions have been drivers of these trends.

As it happens, the crisis has hit the industry during a vulnerable time. Poor returns could also be attributed to a lack of liquidity on behalf of major firms which overlooked discipline in limited capital as well as the advent of shale.

The U.S shale industry will not be invulnerable to the consequences of the pandemic, with damage to market compounded by the effects of sanctions placed on OPEC members Venezuela and Iran. After being propped up by private equity since the 2014 crash, it looks set to be in trouble once again.

Leading expert opinions from Pangea SI suggest that Russia and Saudi Arabia are set to suffer the consequences of an all-out price and supply war that has been instigated in the wake of COVID-19. Russia seems to have made a misjudged powerplay in competing with the Saudi market, with most of the macro going against them. This loss, however, will be felt from both sides of the price war.

In the Middle East and North Africa, plummeting oil prices will damage both oil exporters and importers, made more convoluted by empty government coffers. International support will surely play a crucial role in the recovery for these markets.

Sustainability Developments

While the climate debate has been somewhat deafened by the pandemic, it has not gone away, and it will certainly gain more prominence once normality has been restored. Already a growing list of countries have made net-zero emission targets and sustainable development plans. Below are some of the most notable countries or governments to have made net zero commitments:

Austria
Targeted for: 2040
Driven by: Policy position
Canada
Targeted for: 2050
Driven by: Policy position
Chile
Targeted for: 2050
Driven by: Policy position
China
Targeted for: 2060
Driven by: Statement of intent
Denmark
Targeted for: 2050
Driven by: In law
European Union
Targeted for: 2050
Driven by: Submission to UN
Finland
Targeted for: 2035
Driven by: Coalition agreement
France
Targeted for: 2050
Driven by: In law
Iceland
Targeted for: 2040
Driven by: Policy position
Ireland
Targeted for: 2050
Driven by: Coalition agreement
Japan
Targeted for: 2050
Driven by: Statement of intent
New Zealand
Targeted for: 2050
Driven by: In law

Norway
Targeted for: 2030/2050
Driven by: Policy position
Portugal
Targeted for: 2050
Driven by: Policy position
Singapore
Targeted for: 2050 – 3000
Driven by: Submission to UN
South Korea
Targeted for: 2050
Driven by: Policy position
Spain
Targeted for: 2050
Driven by: Draft law
Sweden
Targeted for: 2045
Driven by: In law
Switzerland
Targeted for: 2050
Driven by: Policy position
United Kingdom
Targeted for: 2050
Driven by: In law

 
It is clear then that oil and gas firms will require a significant strategic shift as we head toward the next few decades. Many could be forced out of business as a result of a lack of liquidity. The wake of the virus will see plenty of lay-offs and furloughs, leaving a shortage of skilled labor. Restructuring and the sourcing of this labor will be a focal point of the post-pandemic rebound. In light of pledges to zero emissions and sustainability initiatives, large firms should look to diversify their portfolio and potentially look to other, cleaner, sources of energy.

Big decisions will have to be made, and as such, oil & gas consulting companies will be crucial in helping these firms find viable routes to success.

Consulting Services for the Oil and Gas Industry

Success for big O&G players is not far away with the use of oil and gas advisory firms

Block 128 in South Marsh Island was assigned to a consulting firm to help develop and analyze Pennzoil’s properties. Exploration wells from 20 years ago had helped the client come to the conclusion that 50 BCF in gas potential was at the location, and it was thus deemed an uneconomic venture.

Upon review of these wells, the consulting company believed there could in fact be over 100 BCF in the location, a 100% increase on what was originally thought. It set about drilling seven development wells – of which none were dry. After assisting with the development of a pipeline, platform and facilities, the location identified by the consulting firm was able to produce over 200 BCF prior to now. Employing the use of top oil and gas consulting firms can allow companies to reach untapped potential and make use of all their assets.

An oil and gas supermajor was subject to fluctuations in business responsiveness for their submerged petrotech application. Slow applications, and non-standardized processes across regions in their subsurface teams were part of the problem which resulted in higher cost of ownership, a slower turnaround time and low stakeholder satisfaction. Multiple applications and processes were being used across regions which were not able to effectively communicate with one another.

By using the expertise of an oil and gas consulting company, multiple solutions were identified. These included a better mapping and analysis of workflows and stakeholder mapping, as well as an upgrade to a more advanced subsurface petrotech application across regions. These systems were able to increase knowledge sharing and collaboration amongst multiple teams. In a period of 18 months, costs were reduced by over 30%. Application performance was increased by 35%, and end-user productivity was increased by up to 30%. By using the consultancy firm, costs were dramatically decreased while vastly improving productivity and efficiency.

Corporations That Use External Research

How Pangea SI Improves Oil and Gas Projects and Investments

The sectors for O&G projects and investments are evolving, and thus warrant an evolved research and insight approach. Alongside Pangea Resourcing, Pangea Strategic Intelligence are well equipped and experienced in helping firms make a strategic shift through the areas our consulting covers. These being:

      Supply chain management.
      Workforce mobilisation planning.
      Research design and implemenation.
      Market screening and valuation.
      Strategic due diligence.
      Operational model benchmarking & design.
      Competitive landscaping.
      Regulations and Policy.
      Project and investor profiling.
      Advanced analytics and reporting through digital strategies.
      Business unit strategy.
      Transition to clean energy sources.

 

Technical Areas We Can Help Your To Gain Insight Into

Crude oil distillation
Hydrotreating Gas separation
Light ends recovery
Fractionation
LPG production
NGL
LNG
Sulphur recovery

Alkylation
Polymerisation
Isomerisation
Aromatics
VCM
PVC
Polyolefins
Storage and handling

Using Pangea’s consulting platform to propel your results:

1

A Knowledge Gap Is Identified

Clients notify us that they need leading insight for their project.

2

Pangea SI Sources and Vets Experts

We engage and vet subject matter Experts matched to the request at speed.

3

Consultation Takes Place

Clients consult with their shortlisted Expert(s) and obtain forward knowledge to incorporate into their strategic plans.

4

Better Results Faster

Clients benefit from more refined analysis and practical recommendations to achieve a quantifiable business impact.

When we first engaged Pangea SI, we were not sure about their model. Engaging directly with market-embedded specialists had appeal, but it was not something we were used to for research.

We contacted Pangea SI and one of their direct competitors. Pangea’s Industry specialism helped them to come back with relevant profiles (one of which was particularly suitable) within 48 hours. Pangea also offered us commercial flexibility that was a much better fit for us than the other provider we considered.

We would never have tried this method had it not been for the quality of Pangea SI’s service and their willingness to come to a financial arrangement that met our needs.

Still, even after we decided to go ahead, we felt the service was expensive on an hourly basis, and we were uncertain about what the return on investment would be.

Fortunately, we were surprised in a positive way by how much information we could gather from a couple of hours of consulting time with a genuine expert on the topic. By engaging with a market specialist who knows a lot about the subject we needed, rather than making use of more general ‘consultants’ that know a little about a lot, we were able to cover a very significant number of questions in the time we had with them, and in a much more granular way than we could have through other research methods.

We were positively surprised by this way of doing research and will definitely consider this again in the future, if we need information about a specific topic.”

 

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