Oil sector at an inflection point

The energy industry is in a significant inflection point, Booz Allen Hamilton, a global consulting firm, says in its recent Energy Trends for 2016 report.

It notes “oil and gas companies are in the middle of a prolonged downturn, causing leaders to look for new innovations that can make their businesses more efficient”.

The response by energy companies will potentially make-or-break their future market positions, the report adds.

It points out that the energy industry, which has been accustomed to plans spanning decades is now forced to adapt and react to changes that happen very fast. The sector is in the midst of a bevy of threats as well as opportunities emerging from today’s disruptive technology.

Energy Trends report warns that low oil prices will make it difficult for oil companies to pro actively identify and manage cyber threats that can affect operations.  A low price will force oil companies to focus on reducing extraction cost as well as overhead costs. The use of analytics to identify ways to reduce overhead costs and focus on becoming data driven organisations will be the norm in coming years, the consulting group added.

Companies will seek solutions regarding their less tech savvy employees, as new technologies are essential for trimming costs through automation of current manual processes, according to the report. Another key trend for 2016 will be the continued shifting of demand as well as innovation and opportunity to East. 

Referring to the International Energy Agency estimates, the report concurs that the emerging economies will account for more than 90 per cent of net-energy-demand-growth by 2035.

Digital transformation will be a major theme in the coming years for the sector, the report predicts, and utilities that learn how mobile and digital strategies can go beyond operational cost savings to create customer value, often in the context of new business models, will make the leap.