Velda Addison, Hart Energy
It’s no secret that leaders of oil and gas companies want to focus more on customers’ needs, but they also want to better harness technology and communicate their success stories during today’s challenging times.
That’s according to a PriceWaterhouseCoopers (PwC) global survey of CEOs in the oil and gas sector.
“During one of the worst years in the industry’s history, 72% of oil and gas CEOs told us that there are more threats facing their business today than there were three years ago,” PwC said in a report released this week. “Geopolitical uncertainty, overregulation, climate change and an increasing tax burden are among their biggest concerns.”
As part of PwC’s 19th Global CEO Survey, 71 oil and gas executives from 34 countries were interviewed. Although high or volatile energy prices as well as a lack of trust in the business were among the risks identified by the executives at 65% and 68%, respectively, geopolitical uncertainty followed closely by overregulation were seen by most as concerns at 89% and 87%.
Not surprisingly, increasing tax burden and exchange rate volatility were also high on the list of concerns.
“All of these issues are having an impact on confidence in the global economy. Like their peers in other industries, oil and gas CEOs are less optimistic about global economic growth this year, with just 27% expecting it to improve, down from 35% last year,” PwC said, adding that the slowing demand growth in China and elsewhere is part of the industry’s pain.
“Oversupply in the industry coupled with lower demand have driven oil prices down dramatically. And the imbalance looks set to worsen this year, leading to expect prices to stay ‘lower for longer,’” according to PwC.
Good news is that technology, according to PwC, is expected to play a key role in improving the situation operationally as well as in strengthening relationships with stakeholders, managing talent and assessing risks.
In the report on the survey results, Apache Corp. (NYSE: APA) CEO John J. Christmann IV called better data the company’s technological “holy grail.”
“I’d like to have technology by which we could take all our data, modernize it, and put it at our fingertips,” Christmann said. “We have warehouses full of old paper data and information. ...In the end, we live and die by gathering and analyzing good-quality data, so if I could do that quickly, it would save us a lot of time, effort, energy, and money, and move us ahead.”
He’s not the only one betting on technology to improve life in the oil patch. Many others are starting to embrace digital technology, including use of sensors with optimized software, harnessing big data and utilizing prescriptive analytics.
But the industry remains behind the most others when it comes to using new technology to engage with stakeholders or simply share company success stories.
At 59%, the survey also showed that oil and gas companies rate data and analytics as the top connecting technology followed at 52% by CRM systems when it comes to stakeholder engagement programs. Yet, PwC pointed out that other industries rank such technologies higher.
The survey revealed that only oil and gas companies are less likely to use social media than other industries—35% versus 50% overall.
When asked to what extent are you making changes in how technology is used to assess and deliver on wider stakeholder expectations 52% said they are making some changes while 35% said they are making significant changes. Five percent are not planning any changes.
“Oil and gas CEOs listed key risks, innovation and environmental impact at the top of their list of areas they want to measure better. Oil and gas companies operate all around the globe, under all different types of terrains and environments,” PwC said in the report. “As with any extractive industry, there are environmental considerations, and the oil and gas industry is highly scrutinized by the general public, regulatory agencies, the media and more. The ability to better measure and communicate about some of their risks and efforts to minimize environmental impact would help them improve their global image.”
It was encouraging to hear that “70% of oil and gas CEOs agree that business success in the 21st century will be defined by more than just financial profit.”
It’s also about having a positive impact on people’s lives.
“Energy is something that this country needs. Obviously, we want to provide it as cleanly as we possibly can, and we have goals and measures in terms of how we protect the environment and our safety record,” Christmann said. “Our objective is to provide, explore, and find hydrocarbons and then give back to the communities where we live.”
Velda Addison can be reached at firstname.lastname@example.org.
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