The current energy landscape is a ‘paradox of change’ with the strong push towards low-carbon solutions offset by ongoing high consumption of petroleum and fossil fuels, according to a DNV survey.
The push-and-pull dynamics continue to pose headaches in boardrooms as executives embark on new corporate strategies and investment decisions.
Despite the decarbonisation drive, 51% of executives in the 442-person survey believed global investment in new oil and gas capacity is ‘insufficient’, with 70% of North American executives particularly concerned compared with 40% in Europe.
A resounding 82% of respondents recognised the need for new operating models to achieve efficiencies. Profitability continues to be a challenge due to the high-risk nature of oil and gas investments.
The future of the sector hinges on its ability to meet both demand from consumers and businesses and decarbonisation targets, it states.
Source: DNV
When it comes to renewables, the leading challenge, cited by 49% of respondents, is the low financial return or profitability, while a third cited constraints posed by their existing business models and risk profiles. However 61% said reducing the negative environmental impacts of operations is a ‘top or critical priority’.
Required capital investment is a significant obstacle (30%) along with limitations in organisational capabilities (26%), operational costs (21%), organisational culture (19%) and scaling up or growing revenue (18%).
Attracting young, skilled workers is critical, with 66% of executives prioritising it to support expansion and modernisation efforts.
The industry is poised for a structural transition as it leverages digital tools, new workforce strategies, and increased decarbonisation efforts.
Ditlev Engel, CEO, Energy Systems at DNV, said the oil and gas sector is at a critical juncture and reconciling the dual positions is “not an easy fix”.
He said, “Our survey demonstrates that industry leaders in the sector are confident about their role in the energy transition and are actively seeking solutions to navigate this transformation. More profitable business models and clear policies are needed to accelerate this change in the sector.”
