Key Challenges of Oil, Gas and Energy Industry
The oil, gas and energy industry continues to be affected, hence effects the global economy. The economic turmoil, regional conflagrations and the continuing volatility are some of the challenges that seem to face the oil, gas and energy majors today, among others. Businesses are looking to find some semblance of order in the unfolding events and find a common ground to create new policies and explore newer growth models.
Key Challenges Facing the Oil, Gas and Energy Industry:
Economic Turmoil: The economic challenges emanating from China and Europe’s struggles on the financial front continue to affect the numbers. Chinese state majors are considering various alternatives to get back production to previous levels, but they will take time though the Chinese Government has also chipped in to help them rise from the morass. There has been a reduction in consumption in oil, gas and energy since the slowdown and it is difficult to say when it may revive. Also, European companies are still not performing at levels they used to and the future consumption is likely to stay down.
Regional Conflagrations: The rise of the ISIS in the Middle-East and Russia are taking an active role in the Syrian crisis are two of the major political concerns that face the oil, gas and energy industry today. Control by the extremists of oil fields and reserves are definitely going to give them an upper hand in any negotiations. Moreover, the pan-Middle-East nature of the crisis makes it harder to take care of. Though action is being taken, it is sporadic and not at the same level as previous interventions that were more massive and direct. Companies with interest in these regions will have to watch the situation very closely.
Volatile Prices: Though the volatility has decreased considerably since last year and the beginning of this year, it continues though somewhat on a lesser scale. Experts are of the opinion that the Brent and Crude prices are going to increase in the future as companies taper production, though some add that this may be temporary as slowing down production is going to further increase costs and hit the already beleaguered bottom line of the oil majors.
More Production, Less Consumption in Oil & Gas: Data shows that consumption is down. Certain economies are performing well but the bulk of the world remains affected by China and Europe. Some experts are of the opinion that the Chinese slowdown is temporary and the giant is going to bounce back (an indication may be the action to stop the one-child policy to boost future growth). Nonetheless, companies hit by the volatility and who have invested billions in E&P will remain wary. They may also look for options such as digitization, robotics, etc. to cut down on costs.
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