In March 2020 COVID-19 was officially given pandemic status by the WHO; exactly 3 months after initial reports in China. Consequences of this pandemic will show for years to come, with short and long-term effects, say analysts at PwC. It took almost a decade for the world to recover from the 2007-2008 financial crisis, and for some parts of the world, they have yet to recover from it.
The energy landscape
An outlook on the oil & gas industry by S&P 500 statistics show that it has been underperforming for the past 15 years, when compared to other S&P 500 companies. At the time of its emergence, the revolutionary industry found itself a favourable industry and many people were onboard. In each oil producing nation, the industry found no shortage of investors that ultimately led to more profound discoveries such as unconventional oil (shale) and the technologies that followed. As most are aware, oil prices have always been steep, especially when it comes to production costs. However, shale, along with the turbulent history of oil, has reshaped the structure of the industry, whereby flattened production costs are the norm.
Long term challenges
Industry leaders and market index companies advised to expect challenges ahead for the macro environment in oil. While there is a predicted growth for oil demand within the next decade or so, a slow decline is soon to follow. For now, global gas and liquefied natural gas (LNG) show promise in the energy transition, as it is supported by the continual growth of demand. However, in longer periods, gas prices are expected to face the same pressure as oil; decision making will be driven by the peak demands and incremental economy of the oil-producing nations.
The crisis as a catalyst
Following the initial outbreak of the pandemic, it seems that responses toward it were insufficient. This not only became a monumental challenge for humanity following the weeks and months to come, it was also an unprecedented economic crisis.
Throughout the world, the industry responded tactfully and with great effort in order to safely operate essential assets. The mitigation of the crisis was successfully averted, with many employees either encouraged to work from home or undergoing necessary testing. One certainty that remains is that the current crisis will impact the industry in the short term as well as the long term. How the oil and gas environment further responds to the changes in the future will only depend on the potential supply, demand outcomes and the actions taken by stakeholders that include investors, government and regulators.
This crisis can still be viewed through an optimistic perspective, where new and better opportunities may arise and take it merely as a catalyst that accelerates the permanent shift in the ecosystem.
Thriving in the new environment
In other news, the oil and gas industry can certainly benefit in learning from other industries such as steel, automobile manufacturing and materials. These industries have restructured their business models, changed the way they work, and have also made moves toward niche markets which have been beneficial in cutting costs while improving operational efficiency. JP Morgan (banking) on the other hand, utilised their ‘invincible’ balance sheets to make attractive acquisitions. This did not come cheap as they had to mobilise a significant amount of resources.
Some existing models may stay
While many companies opted to restructure their organisation and change their business outlooks, there are still companies with existing, traditional models that do not require going through such a face lift as the model has been forecasted to withstand such impacts the pandemic has wrought.
This brings us to the low-cost commodity supplier with first-quartile assets that thrived in this environment. Not all business models need restructuring. These are the organisations that have created value through scale, capability and operational efficiency in speciﬁc areas.
An effective response
As the news of economic downturn and high unemployment rates unravelled, instead of standing by, many took immediate action. From the government, institutions and businesses, no one stood idly by, waiting for someone else to do something.
Some elements that should be taken into consideration, now that non-essential sectors are operational, is to repair, rethink, reconfigure and report. These 4Rs are imperative in adapting to the ‘new-normal’.
How SynergenOG took action during the crisis:
During unprecedented times of crisis, SynergenOG in collaboration with Caspian Digital Solutions, took up a more proactive approach in developing an important solution for contact tracing throughout the pandemic.
Across the globe, the different stages of the pandemic are evident; while there are countries that have achieved 0 cases (congratulations, New Zealand), there are also nations that are still struggling against the rapidly rising number of cases. Most countries, however, are flattening the curve successfully. This is where the brainchild of effective response and innovative solution comes in.
The urgency to develop the Entry Management System (EMS) was important for the team, as SynergenOG and Caspian Digital Solutions have always viewed the world through an analytical, and action-based lens. A solution-focused disposition, among many other qualities, has also become the driving force in the successful implementation of the system.
The EMS seamlessly incorporates tracing needs and user-friendliness into a simple management system for corporations, retail and business-owners to use. This system permits organisations and companies to create the safe environment they are obliged to create in order for businesses to resume according to the law. As time is of the essence, no delay or service disruption is expected. This system ultimately removes the need for physical contact through a source such as a pen, and saves precious time by scanning the QR code. The data is stored in a secure server and in the event an individual tests positive for the virus, the details can be retrieved for contact tracing.
SynergenOG hopes to further establish their leadership in areas of safety, in oil and gas, supported by technology.
Parts of this article were first published by McKinsey & Company.