Will oil and gas companies go all in or go in all?
August 26, 2019
August 26, 2019
As the world transitions to more sustainable forms of energy, several industries are stepping onto what has historically been oil and gas companies’ turf. Oil and gas executives are clearly aware their industry is in upheaval. In fact, 82 percent believe their current business models will be unrecognizable in five years.1
To maintain their competitive agility, oil and gas companies can’t ignore the increasing pace of industry convergence. They need to tackle it head-on by embracing one of two distinct approaches to value creation. Specifically, they can transform their core business by becoming specialists, or they can pivot to new opportunities as generalists.
Choosing the right option is critical. But making the right choice is harder than many think.
This accelerated pace of change puts tremendous pressure on oil and gas companies to determine when and how to position themselves. The good news is that they really have just two options. They can become generalists that pivot to new value-generating opportunities. Or they can become specialists by strengthening and transforming their core business.
For both groups, competitive agility is key. The wise use of digital technologies is equally critical.
Other industries are stepping onto what has long been oil and gas companies’ turf. These interlopers aren’t just positioning themselves to monetize their capabilities in a cleaner, lower-carbon world. They’re accelerating the energy transition.
Only 7 percent of oil and gas companies use technology advances to drive their financial performance.2 This means the industry is leaving billions of dollars of value on the table. In the age of industry convergence, oil and gas players can no longer ignore digital’s potential. Automation, augmentation and digitally-enabled ecosystems are particularly relevant—supporting everything from cost reductions and talent sourcing to better decision-making and consumer connectedness.
While generalists and specialists both need to embrace digital technologies, they do so in different ways. Generalists focus on automating processes and optimizing decisions with analytics. Specialists use automation, as well as augmentation and ecosystems to shine during periods of high commodity prices and compete during down-cycles.
Accenture Strategy has found that digital technologies can unlock significant EBIDTA value for oil and gas companies.3
30%
for upstream players
15%
for downstream players
The speed of industry convergence is likely to increase as hydrocarbon demand growth diminishes, as more stringent carbon regulations are enacted, and as consumers more strongly voice their desires for less carbon-intensive, end-to-end energy-related products and services.
To ensure prosperity for the world’s growing population and to power the world’s expected economic development, oil and gas companies need to define the areas in which they can maintain a competitive advantage. Leaders are already taking three actions:
Others would be wise to follow their lead.
1 Accenture Strategy, Cornerstone of future growth: Ecosystems, 2018.
2 Accenture, The digital oil company: Getting ahead of the Energy transition, 2017.
3 Accenture Strategy experience.