Amid uncertainty in commodity prices and global economic conditions, 71% of senior oil and gas professionals expect to maintain or increase investment in decarbonization, which marks a sharp increase compared to 2019 levels, according to a new study by DNV GL.

Despite a push in low-carbon investments, the overall optimism for industry growth has slightly weakened this year, according to another key finding of the study. While two thirds (66%) of senior oil and gas professionals are confident of industry growth in 2020, this is down 10 percentage points from the 76% recorded in 2019, the report stated.

“The [industry growth] numbers have fallen in 2019, probably due to a mixture of geopolitical issues and climate change concerns, but confidence is still very high compared to the years before 2018,” Frank Ketelaars, regional director of Americas at DNV GL, told Hart Energy.

Overall, DNV GL reported the outlook, which is based on a survey of more than 1,000 senior oil and gas professionals and in-depth interviews with industry executives, showed greater recognition of the urgency of the world’s climate problem and that a solution will involve adoption of various sources and measures.

Companies are looking at a portfolio of solutions, according to Liv A. Hovem, CEO of DNV GL’s oil and gas business unit, including reducing carbon emissions, diversifying into renewable energy, decarbonizing oil and gas production and increasing investment in decarbonized gas such as hydrogen produced from electrolysis and renewables, or from natural gas combined with carbon capture and storage (CCS).

“More and more people in our sector are realizing that we cannot sit and wait for the perfect solution to jump to a completely decarbonized energy system,” Hovem said in a statement. “The industry will emit too much CO₂ in the meantime, so we have to start working on decarbonizing the oil and gas sector with the technologies we have already in order to meet national and international climate goals.”

However, Ketelaars pointed out that European oil and gas companies are most likely to lead the way as the study showed that there are certain regions that are exceptions to the global hype of low-carbon efforts.

In Asia, for example, the focus will be more on meeting the soaring demand for energy to maintain economic growth and development. Meanwhile, in North America, the study recorded only 25% of respondents intended to move toward decarbonization in 2020.

“European headquartered oil majors are under pressure to lead the decarbonization effort, which has a lot to do with public opinion and local regulations in Europe,” he said. “In many European countries, including large producers like Norway, Denmark, U.K. and the Netherlands, where decarbonization is on top of the agenda.”

Although the energy transition is impacting investment decisions and boosting new business opportunities, a smaller proportion of North American respondents reported that their organizations are working towards a lower-carbon energy mix. CCS emerged as a concern in the region, while digitalization and cybersecurity remained the highest priorities for R&D and technology investment.

Ketelaars added another takeaway of the study is that companies are maintaining their focus on cost control to ensure they build new efficiencies on the hard-won gains in the last four to five years since the downturn.

Oil and gas prices are expected to remain low for longer and the industry needs to remain competitive with renewable energies, whose costs are expected to continue to drop over the next 30 years.

The survey reported that some 64% predict their organizations will hit profit targets this year, which is largely consistent with 2019 levels. In addition, nearly half (46%) of respondents said their companies would still achieve acceptable profits if the oil price were to average less than $50 a barrel.

Natural Gas Trends

Although the natural gas markets faced a few obstacles in 2019, long-term demand remains strong as the industry continues to invest in the cleaner-burning fuel. With gas expected to overtake oil to become the world’s largest energy source in the mid-2020s, 74% of respondents expect to maintain or increase investments in gas projects, compared to 65% in 2019. Asia Pacific respondents reported the sharpest rise in their intentions to invest in natural gas, jumping from 67% to 81% of respondents, despite a challenging year.


Almost all respondents (92%) were in unanimous agreement of either increasing or maintaining their level of spending on digitalization in 2020.

“Digitalization has been on the agenda of the oil and gas industry for the past two to three years and there is now quite a clear understanding on what companies want to achieve through that,” Ketelaars explained. “Digitalization is seen as a key enabler to reduce costs further through automation/remote operations and enhanced oil/gas recovery. … Three key areas [of digitalization,] as mentioned in the report, are the use of platforms to manage data, the use of cloud computing and artificial intelligence (AI).”


The study reported that this year will also mark an increase in renewable energy investment. Offshore wind is expected to lead this effort with 63% of organizations anticipating to increase their investment, up from 40% in 2019.

Globally, more than half (56%) of respondents agreed that there will be a significant increase in investments in CCS within the oil and gas industry over the next five years.

The survey also reported hydrogen as the largest proportional increase of all clean energy sources among those looking to invest outside of oil and gas. Twice as many respondents (42%) are looking to invest in hydrogen in 2020, compared to 20% for 2019.

Talent Shortage?

Despite lessening in severity relative to 2019, skills shortages and an aging workforce were among the top-five barriers to growth in 2020. Some 45% of respondents said that the industry will face a critical skills shortage this year, while more than half of respondents are currently concerned about losing talent to rivals (54%) and other industries (51%).

DNV GL’s 2020 outlook suggests that “progressive stances and tangible steps forward on both digitalization and decarbonization can potentially help attract and retain younger talent.”