If the year 2011 began with the paradox of high oil prices and good economic growth playing out simultaneously, there are now clear signs of a reversal. GDP growth is slowing across the world, albeit in varying degrees, pointing to a halting and still fragile recovery from what the International Monetary Fund calls the Great Recession.
The International Energy Association now expects oil demand to rise year on year by only 1.2 million barrels per day (b/d) to 89.5 million b/d for the current year. This figure could inch down to 89 million b/d if global growth slows further. The worries about the US economy’s health have now been compounded by ongoing signs of sovereign debt contagion in the eurozone. Essentially, a very uncertain economic and market outlook—some of it reflected already in the downward pressure on oil prices and a tighter demand situation for gas.
I have captured these developments in much greater detail in the latest issue of the Energy Industry Trends Review that I write every quarter. The year 2011 has been a good one so far for the upstream oil sector, thanks to the high oil prices, and the second quarter results show great profitability. But as the focus of the industry shifts to sustainable energy sources and higher cost environments—such as deepwater exploration and production and unconventional oil and gas plays— squeezing profits out of operations is going to get tougher. The ability of the upstream companies to find reserves and bring them online safely and economically will set them apart from the herd.
In this blog, I will not only pick up and analyze current and future energy sector trends, tapping into industry news as well as our own research, but also offer insights into how oil and gas companies need to manage their businesses for high performance in the emerging environment. In addition, this blog will bring home some of the decades of hard-learned experience Accenture has earned by serving the major, national and independent oil and gas companies.
I consider this blog an opportunity for dialogue and discussion. Let me know your thoughts, questions, suggestions and stay tuned to learn more on how to keep ahead of the challenging times. Leave a comment or email me.
Watch the video: Arthur Hanna, Energy Managing Director, discusses the latest trends impacting the oil and gas industry.
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