Sparking meaningful change for oil and gas companies in India to outpace change
The Indian oil and gas (O&G) sector is no stranger to crises. Price volatility, regulatory changes, environmental concerns, geo-political factors and logistics issues have kept the sector on tenterhooks. However, despite the challenges, the industry has prevailed until now. With COVID-19 slowing down trade, transport and economic activity, Indian O&G companies must, once again, demonstrate the resilience to outmaneuver uncertainty and turn current challenges into meaningful change.
When the going gets tough
There’s no doubt the pandemic has altered the O&G landscape tremendously, be it upstream, midstream or downstream activities. As the stay-at-home curbs are lifted and businesses slowly reopen, the O&G sector’s road to recovery is going to be long and tough.
These statistics will help to understand the situation better—globally and in India. This year’s second quarter saw 20–40 percent contraction in transportation globally, resulting in a reduction of 12–24 million barrels per day (bpd) in crude oil demand. A global recession will put further pressure on the remaining 40 million bpd of non-transportation demand. The concurrent supply-side shock from OPEC+ countries has led to a global crude supply-demand imbalance with 20.3 million bpd in excess.
In India, the crisis has accelerated several post-2014 changes for the upstream segment. For example, in the area of production excellence, there has been a shift from cost and volume management to agile production along with maximizing value from base production. Post-COVID-19, the carbon agenda of low or zero emissions now permeates all aspects of the business and has become a performance driver critical to investors. For the downstream segment, the imperative is customer-centric business, carbon neutrality, beyond-energy offerings and technology infrastructure upgradation. The gradual easing of restrictions has shown a slight improvement in the demand. However, industry experts believe that it will take some time for the demand to pick up and reach pre-COVID-19 levels.
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