Across the globe, major gas and oil companies are planning on investing more in digital technologies in an effort to save costs, especially in the wake of the volatile 2018 market. According to Brent crude futures numbers, in the third quarter of last year oil prices hit a high of as much as $85 per barrel, though prices recovered and stabilised by January.
Due to the recent unpredictability of the marketplace, many oil giants are aiming to improve their efficiency in the coming year. In a survey conducted by EY of 100 oil and gas executives, 89% of respondents said that they planned to increase their investment in digital technologies over the next two years, while almost half of respondents cited efficiency as the driver behind their investment plans.
In the same survey, most respondents indicated that they expected robotic process automation (RPA) and advanced analytics as the two most important digital technologies of the coming five years. Three-quarters of organisations surveyed already had RPA in place, while almost 90% said that they utilised advanced analytics to help boost productivity. Around 70% of respondents plan to introduce the Internet of Things (IoT) in the next year and a half.
Why Oil and Gas Companies are Embracing Digitisation
One of the main reasons that gas and oil executives are expressing an increased interest in digital technologies is because automation can help to reduce wasted time and money in an industrial environment. By implementing RPA, companies reduce their reliance on costly and often inefficient human labour. It also helps to streamline complex processes and increase output.
According to Jeff Williams, Global Oil & Gas Advisory Leader at EY, “There is now broad recognition across the industry, however, that short-term cost-cutting is not the answer, and that digitisation has the potential to significantly improve efficiency. If businesses can think holistically about technology, they can go further to unlock ambitious growth opportunities and emerge as industry leaders.”
The Challenges of a Digital Future
Though oil and gas executives are optimistic about the future of digitisation, many also remain wary of the challenges it poses. According to the EY report, only 31% of respondents believed that their investment and trading plans were “highly aligned” with the views of their cohorts and colleagues. Furthermore, almost half felt that reaching an agreement regarding digital investment among senior executives and the board of directors would be a strategic problem in the coming future.
Williams believes that the key to integrating new technology into the oil and gas sector is not to outsource digital solutions, but instead to build an in-house system from the ground up. According to Williams, “There still appears to be a lack of confidence among senior oil and gas executives about how to define and execute their digital vision, and the scope of many businesses’ strategies is still too narrow. While outsourcing can be beneficial at the outset, ultimately, we believe the winners will build integrated, in-house capabilities that embrace the transformative potential of new technologies.”
Though the future of digital technology within the gas and oil industry promises to be a challenge, many companies are ready to face the issue head-on. The coming year promises to see a surge in gas and oil digital investment and companies introduce new technology into their processes. With an increased focus on the digital realm, gas and oil giants can expect to see reduced overhead costs and increased efficiency throughout 2019.