In a recently concluded International Seminar in the Middle East Region for Oil & Gas firms, participants expressed concerns about the five issues that the Oil & Gas industry is currently facing. These issues pose both significant risks as well as some opportunities. Senior Executives from Oil and Gas firms have started considering them in planning their short term and long term objectives.
The five important issues mentioned were as follows:
1. Recovery of the economy and global consumption: This seems to be the most important single risk factor in the immediate term. While the OPEC is happy about the current crude prices (in the range of 70-80 USD per barrel), there are big uncertainties about the future. There are significant downside risks that demand will slow on an uncertain global economic outlook, the International Energy Agency (IEA) said in August 2010.
The IEA is projecting that China and other developing nations will offset shrinking demand for oil next year in richer countries such as the U.S., where the Federal Reserve said yesterday it won’t unwind stimulus measures because the economy is weaker than previously anticipated. Even China is showing signs of slowing growth, with industrial output increasing the least in 11 months, according to a report today.
2. The impact of renewable energies: In 2008, of the total worldwide energy consumption, roughly 80 to 90 % was derived from the combustion of fossil fuels. This percentage is expected to reduce in coming years, with nuclear, wind, solar, and renewable sources contributing to a much higher % in providing energy to the world. For example, Europe could meet at least 80% of its energy needs from renewables by 2050 without paying more for electricity than it would by continuing with current fossil-fuel based infrastructure, according to a new report by the European Climate Foundation (ECF).
3. Legislation on carbon emissions: The global community is now taking carbon emissions seriously. This trend will continue in future, with expected legislations on carbon emissions from major economies of the world. This will have a direct impact on the world demand for oil.
4. Questions of surplus in refining capacity: The world is facing a significant surplus of refining capacity despite a vast number of cancellations and deferrals of new projects, says consultancy Turner, Mason & Company in a new report. The key reason for the refining surplus is that a sharp fall in global demand for oil products has occurred at the same time of a spate of new refinery capacity. And not until 2016 will demand be expected to grow more than refinery additions, says the report Crude and Refined Products Outlook.
5. Marketing of oil and gas in environmentally conscious world: Oil and gas firms are now realizing the need for better marketing of their products in environmentally conscious world. Usually referred to by the term Green Marketing , Oil and Gas firms need to demonstrate their corporate social responsibility and efforts they have made towards environment protection.
