{"id":5628,"date":"2017-01-26T07:46:11","date_gmt":"2017-01-26T07:46:11","guid":{"rendered":"http:\/\/www.oilnewskenya.com\/?p=5628"},"modified":"2017-01-26T07:46:11","modified_gmt":"2017-01-26T07:46:11","slug":"diversification-consolidation-and-ongoing-efficiency-measures-will-be-hallmarks-of-oil-and-gas-sector-in-2017","status":"publish","type":"post","link":"https:\/\/www.oilnewskenya.com\/index.php\/diversification-consolidation-and-ongoing-efficiency-measures-will-be-hallmarks-of-oil-and-gas-sector-in-2017\/","title":{"rendered":"Diversification, consolidation and ongoing efficiency measures will be hallmarks of oil and gas sector in 2017"},"content":{"rendered":"

New research by DNV GL, the technical advisor to the oil and gas industry, shows oil and gas companies seeking to rebalance business portfolios and reorganizing for a new era. In a period of drawn-out recovery, almost half (49%) of senior oil and gas professionals surveyed expect their businesses to diversify into, or invest more in, opportunities outside of oil and gas. Still, almost eight out of ten see long term opportunities for gas.<\/em><\/p>\n

Short-term agility, long-term resilience\u00a0<\/a>is DNV GL\u2019s seventh annual benchmark study on the outlook for the oil and gas industry. It provides a snapshot of industry confidence, priorities and concerns for the year ahead, drawing on a survey of 723 senior sector players1.<\/p>\n

The research by DNV GL reveals signs of deep, strategic changes for sustainable growth beyond cyclical patterns. 26% of industry leaders expect their business to invest or increase investments in renewable energy in 2017. As many as 59% see investments in renewables as a shift in long-term business strategy.<\/p>\n

\u201cThe number of companies we now see pursuing opportunities beyond oil and gas signals a step change in the reshaping of the sector and demonstrates its ability to adapt and build a more robust, diverse and sustainable energy future,\u201d says\u00a0Elisabeth T\u00f8rstad, CEO, DNV GL \u2013 Oil & Gas.<\/p>\n

Oil and gas professionals expect investments to continue across the value chain in 2017, though at a lower level than last year as the percentage of respondents expecting to maintain or increase CAPEX has dropped from 43% to 39%. Notably, 77% believe gas will become an increasingly important component of the global energy mix over the next 10 ten years.<\/p>\n

\u201cDespite the drawn-out recovery, investments are still being planned across the value chain. In 2017 we will see broadening of business portfolios and consolidations for growth as a way of reorganizing for the future,\u201d T\u00f8rstad comments.<\/p>\n

A third of respondents (33%) say their organizations will be increasing M&A activity in the next 12 months (up 10%). More than three-quarters of respondents (78%) expect increased industry consolidation in 2017.<\/p>\n

85% have cost management as a top or high priority for 2017 and a majority (63%) see their current cost-efficiency measures as marking a permanent shift towards a leaner way of working. Organizational restructuring (37%), reducing operating expenditure (35%), and improving efficiency from existing assets (29%) are the top three priorities for cost control in 2017.<\/p>\n

Two-thirds (66%) say that the cost pressures are driving more industry collaboration, a positive effect of recent market challenges. Standardization efforts are also increasing as it helps remove remaining complexities.\u00a066% of respondents say their organization will seek greater standardization of tools and processes in 2017, up from 59% last year.<\/p>\n

Digitalization is also increasingly seen as a means to enhance operational and cost efficiencies. 39% expect their organization\u2019s spend in this area to increase in 2017. Half (49%) of respondents also said their organization will embrace digitalization to increase profitability.<\/p>\n

\u201cLast year, we saw intense and painful short-term cost-cutting measures in the industry,\u201d Elisabeth T\u00f8rstad\u00a0commented. \u201dThough few expect a recovery in 2017, and cost-cutting measures are still on the table this year, confidence in the oil and gas sector growth has stabilized for now and opportunities are being created. Improved focus on collaboration, standardization and digitalization will enable the industry to transform to meet the demands of the new era and become profitable in volatile markets.\u201d<\/p>\n

Other key findings include:<\/p>\n

Confidence in oil and gas growth for the year ahead has stabilized for now (32% compared with 30% in January 2016) \u2013 in line with the price of oil. Confidence in overall prospects for individual companies is down to 44% from 50% last year, however.<\/p>\n

Respondents based in North America report significantly higher confidence in the outlook for 2017 than those in other regions. Almost two-thirds (65%) are confident of their company\u2019s overall prospects, compared with 45% in Asia Pacific, 49% in the Middle East and North Africa, and just 40% in both Europe and Latin America.<\/p>\n

76% believe their organization was highly or somewhat successful at meeting cost efficiency targets over the last 12 months compared with 74% last year<\/p>\n

The intensity of cost control has been reduced – the portion of respondents identifying cost efficiency as a top priority has fallen from 41% to 34%.<\/p>\n

The focus on workforce reduction as a cost cutting measure has dropped by six percentage points on last year, down from 31% to 25%. However, 55% still say that overall headcount is expected to decrease in 2017 compared to 51% in 2016.<\/p>\n

When asked to predict the price of oil at the end of 2017, respondents forecast an average of USD57.8 per barrel.<\/p>\n

52% (45% in 2016) say their organization will favour investment in more agile projects that are more adaptable within shorter timeframes<\/p>\n

The leading drivers for collaboration in 2017 are to make new projects financially viable (51%), to reduce risk\/downside exposure (42%), and to access skills they do not have (33%).<\/p>\n

Nearly half of respondents (49%) agree that the industry downturn is helping to reduce the complexity of projects and operations.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

New research by DNV GL, the technical advisor to the oil and gas industry, shows oil and gas companies seeking to rebalance business portfolios and reorganizing for a new era. … Read More<\/a><\/p>\n","protected":false},"author":24,"featured_media":737,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[5790,5616,5801,5796,5795,5800,5789,5799,5793,5794,1696,1835,1881,2955,5791,5792,5797,5798],"class_list":["post-5628","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-agility","tag-capex","tag-consolidation","tag-cost-cutting","tag-digitization","tag-diversification","tag-dnv-gl","tag-global-energy-mix","tag-long-term","tag-ma","tag-natural-gas","tag-oil-and-gas","tag-oil-price","tag-renewable-energy","tag-resilience","tag-short-term","tag-standardization","tag-sustainable-energy","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.oilnewskenya.com\/wp-content\/uploads\/2014\/03\/grains-agriculture-crude-oil-etfs.jpg?fit=428%2C400&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5JWkQ-1sM","jetpack-related-posts":[{"id":9820,"url":"https:\/\/www.oilnewskenya.com\/index.php\/dnv-gl-combines-oil-gas-and-power-renewables-businesses\/","url_meta":{"origin":5628,"position":0},"title":"DNV GL combines Oil & Gas and Power & Renewables businesses","author":"","date":"February 3, 2021","format":false,"excerpt":"Decarbonization is a major focus across the entire energy value chain, and the pressure is on to accelerate the transition and drive deep decarbonization. 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