Oil and Gas: Increasing industrialisation and usage of gas coupled with rise in population and economic growth is fuelling the demand for energy products and solutions. This has led to increased exploration for location new fields, development of unconventional resources, look out for new oil producing techniques specifically secondary / tertiary and increased demand for skilled labour and oilfield services and equipment’s in upstream segment. Focus in midstream and downstream segment is development of transmission and distribution networks, construction of near marked refineries to reduce operational costs, freight charges etc. and expansion of petroleum product distribution network.
Key trends shaping the Industry
Increasing Demand for Alternative Sources of Energy: There has been a favourable and strong demand for alternative sources of energy products and solutions and a conscious effort by government, public and private organisations to promote this in response to meeting long-term energy needs. Gas demand globally will transition from coal and oil to cleaner-burning gas and other alternate cleaner energy sources. For example in transportation there has been a noticeable shift in consumption from gasoline to hybrid to pure electric vehicles. Several industries like Chemicals, Plastics, Metals, and Glass etc. are increasing the usage of natural gas in operation and this has boosted huge demand for natural gas. Similarly industries are experimenting usage of renewable energy like solar, wind, tidal among others. Companies are increasing monitoring and managing their energy needs and consciously working towards initiatives like “Going Green” which are increasingly getting recognised and getting imbed in the thinking towards creating a sustainable corporation.
Concerns on Access to Energy Products & Security: The exponential growth in demand for energy resources particularly in Asian countries will continue to outweigh their production and availability leading to increased dependence on imports. This will increase the vulnerability of countries to energy shocks and rising domestic demand. Increasing gap between demand and supply for both for oil and gas will keep on playing a substantial role in the total energy mix, and hence there is a growing interest for exploiting alternate energy sources like Coal Bed Methane (CBM), Underground Coal Gasification (UCG) and Shale Gas (gas locked in sedimentary rocks) will become essential to balance the demand and supply.
Economic Growth & Strong Government policies: Governments all over the world face considerable challenges when trying to raise electricity, gas, diesel and gasoline prices and so opt for subsidies as an alternative. However, some governments are today now looking at smarter ways energy can be consumed and transmitted, with the concept of smart subsidies being promoted.
Buoyant economic growth is one of major factors driving India’s energy requirements and the Government of India has launched various policies such as the New Exploration Licensing Policy (NELP) and Coal Bed Methane (CBM) policy to encourage investments across the industry’s value chain. The New Exploration Licensing Policy (NELP) is already proven as huge success in attracting the interest of both domestic and some overseas players. The Indian government has allowed 100 per cent Foreign Direct Investment (FDI) is allowed in upstream and private sector refining projects. The FDI limit for public sector refining projects has also been raised to 49 per cent. This has provided good opportunities for accelerating investments into this sector.
Challenges facing the players involved in the industry
Need for Operational Excellence: As companies focus on maximizing value, reducing the cost of operations will be a key component. The need for operational excellence has never been greater in this industry considering that Exploration, development, production and distribution costs are on the rise and refining margins are on pressure. In addition to current operations, companies have to ensure effective execution of capital projects. As the size and complexity of capital projects grows, the ability to effectively execute, often on multiple large projects, becomes a critical competency for many companies. Also considering that there is a huge dependence of Systems and Equipment’s, it is imperative for organisations to work on initiatives to improve availability of the System and equipment’s as measured by OEE (Overall Equipment Effectiveness) levels and at the same time drive initiatives to ensure the shelf life (i.e. extend operation life) of the equipment’s is improved as is measured by Asset Reliability Enhancement (ARE).Driving structured programs and projects in Operational Excellence can unlock potential value in Project management, Operations and ease Operating Margins.
More Innovation and adoption of new technologies: One of the creative challenges faced by oil and gas industries is reduce dependence on existing systems, technologies and practices and look out for more effective practices, development / adoption of breakthrough technologies and employ creative problem solving with a focus on fostering Innovation with in companies or in the value chain.
Shortage of Resource capacity & Talent: The growth in orders is generally good for the EPC companies; however companies will face hiring challenges and will find their technical capabilities stretched thin as they work towards to maximize the talents of their best people. Given the reliance of the oil and gas industry on EPC companies for megaproject execution, it will be critical to the success of the energy renaissance to effectively address the challenges the EPC companies will face. The number of skilled resources continues to decline in this sector. Oil and Gas industry in particular requires vastly diverse human, political, mechanical and technological capabilities. Competition for natural resources has driven companies to explore and produce in harsh, remote and even hostile locations, where even the simplest of logistical tasks can be tough and expensive. Environment also grows more diverse and unforgiving and the challenges more complex, skilled human resources are aging and growing scarce.
How can BMGI help?
BMGI advises government and national oil companies, major and independent commercial oil companies, petrochemical producers, renewable energy companies, oil field service firms, private equity investors and sovereign wealth funds in this vertical. The improvements in this vertical have made BMGI expert in this sector to solve Business Critical Issues. BMGI’s expert knowledge in Strategy, Operations, Innovation, and Technology Transfer & Implementation helps our clients to solve complex and chronic challenges and unlock their inherent potential. BMGI, an Oil and Gas Consulting firm has been supporting Organisations to also develop world class infrastructures i.e. green field projects and transform existing infrastructures which also includes capacity expansion to deliver best products. BMGI’s oil and gas consultant’s enables clients to drive performance excellence in production optimisation, cost and capital management, maintenance and supply chain management
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