By Francis Oti
If you are an EnergyHub customer or regular visitor to our website, chances are that you work for or provide service at some point in the energy value chain. The dramatic changes wrought by the COVID 19 pandemic on the energy industries, ranging from drastic international price changes to huge loss of market share by major oil exporters like Nigeria, and the devastation in the shale oil sector in the United States, whose innovation and drive put the US firmly in the driver’s seat as an oil exporter and the largest producer in the world.
It is a sign of the times that many shale oil companies are filing for bankruptcy because oil prices have remained lower than break-even points for them (and there is no provision for subsidy in the classical sense), and President Trump’s attempt to provide support for them has not been enough to save the day.
At the lowest point of the price crash and near-zero consumption of petroleum products, crude oil exporters had to convert the supertankers which traditionally transported crude oil across the oceans to all corners of the globe, into storage facilities, because they had no buyers to sail to. Large importers like China stockpiled at the low prices until they ran out of storage space. E&P operators were bracing for the nightmare of shutting in production and having to re-complete or re-enter such wells when market forces improved. Luckily for many, the gradual rise in the prices staved off any large scale shut-ins of producing wells. Some analysts believe that part of the reason some countries were slow to cut back production, was the avoidance of shutting in producing wells.
From what has happened so far, 2020 has raised considerable concerns for businesses and especially players in the oil energy industry. The world is now grappling with the aftermath of the pandemic attack as we learn the true meaning of resilience. Energy businesses and service providers have been tested to their limits during this recent crisis. Like other sectors, energy players must continue the conversations on how to stay relevant while balancing the demand and supply of energy products and services. The following strategies are key for energy businesses to remain on top of their game and reposition themselves for the new normal.
- Keep up with Emerging Trends
There’s no doubt that newer trends will keep emerging. Businesses must understand how factors like oil prices, the clamour for low-carbon and carbon-free energy alternatives, COVID19 measures, and digital transformation will affect their business positions.
Reports predict an increase in demand for renewable energy supply. World economies will also have to reposition themselves for this change. However, the adoption of renewable energy forms does not outrightly minimize the continual relevance of fossil fuels. Oil and gas will still occupy an integral position in the energy mix of developing economies in Africa and beyond.
Furthermore, COVID19-related trends are impacting how consumers demand energy products and services. Businesses and service providers will have to consider how to re-adapt to this “new normal.” In it, “contactless” negotiations, transactions, and digital service delivery options will take the lead.
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- Prepare for Transition
It is difficult to ignore the decades’ long campaign by environmentalists for a quicker transition to cleaner energy forms. Fossil fuels, which are the chief products of oil and gas companies, are raising environmental concerns. However, these concerns do not immediately erase the continual demand for fossil fuel energy. Yet, the goal of saving the environment from greenhouse emissions is becoming a central focus.
How companies plan to confront the issues of carbon emission to minimal levels, and the promotion of renewable alternatives, is essential. Observers believe such plans will begin to define and even determine the growth trajectories, and reputation of energy players with governments, investors, and the public.
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- Adopt Flexibility
Perhaps, this is the most critical time to be flexible. Big economies and oil producers may also adopt this approach. The agreement between OPEC and Russia to trim oil supply for market gains are all flexibility measures. But how can energy businesses be flexible? Energy businesses can start by redefining their operational practices. They can be responsive to the change in market trends and consumer behaviour.
For example, in Wuhan, China, e-commerce was a major “contactless” bridge for manufacturers and suppliers to connect with consumers. Search engine results show that customers and even forward-thinking businesses are considering digital approaches. Search queries such as “online food delivery,” “online courses,” and “online doctors” have ranked higher since the COVID19 outbreak. Similarly, energy businesses, service providers, and even professionals can also rank higher in these search results.
These examples demonstrate that energy players can leverage digital resources in business sustainability, even in uncertain times.
Here at EnergyHub, service providers and OEMs virtually connect with their client base. Other players in the value chain, from suppliers to buyers, and professionals can transact safely.
Ultimately, energy businesses must understand the significance of preparing for the future. It starts by taking action now.
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