Even though Green Energy is staking a challenge to traditional oil and gas sectors, there is still a lot to be done. While battery advancements and renewable sources of energy are picking up, they are not being able to keep pace with the planet’s growing demands for energy.
This means that traditional fossil fuel sources like oil and gas continue to lead the way and bear the weight of powering our present and growing our future. In 2021, the oil and gas sectors saw their biggest turnaround. In fact, in 2021, oil prices soared to a six-year high.
This demand was fuelled by the need to bounce back economically after the COVID-19 disaster in 2020. Most experts predict that 2021 too will be a year that will see rising demand for fossil fuels. However, there are some challenges that the industry will have to contend with.
In this article, we are going to explore five major trends that the oil and gas sector will likely experience and one that you should watch out for in 2022. Here is exploring and extracting what 2022 holds for some of the world’s biggest companies and organizations.
List of 5 Trends for the Oil and Gas Sector and Industry in 2022
- ESG will become a strong watchword-
ESG or Environmental, Social, and Governance models of functioning are growing to drive the sector in 2022. The need is to reinvent traditional and profitable businesses and make them come up to speed with everyone in 2022. This means more financial discipline, greater sustainability, acknowledging the dangers of climate change among other things. Businesses in the oil and gas sectors need to focus on strategic changes that help optimize and streamline business models and fix core responsibilities throughout all verticals in the organization.
- Growth of industrial supplier businesses-
You cannot look at oil and gas industries in isolation. There are thousands of businesses and manufacturing facilities that create tools, products, and equipment for rigging and drilling. For example, companies that manufacture essential equipment like premium screen have seen increasing demand in 2021. The same is expected to continue in 2022 as well. These ancillary units and suppliers are the life-blood of the sector and experts predict their sales and profits to keep increasing well into 2022. Exploration activities are set to increase in the coming years.
- Rising global prices based on heavy demand-
If experts at Deloitte are to be believed, in 2022, we are looking at the production of nearly 100 Million Barrels a day production figure. Researchers predict that per barrel costs in the international markets and framed by OPEC countries will likely stand in the high eighties and might even cross the $90 mark by the end of the year. With nations looking to power growth and development in the aftermath of the pandemic, the demand for oil will increase substantially. The US, China, and India will be the major markets that will generate demand.
- Green Energy will not present a challenge in 2022-
With several leading names in the automobile sector making rapid strives in EV technology, the demand for fossil fuels, at least in the transportation sector is expected to decrease. Automobile manufacturers have committed to reinventing their entire production line within the next ten to twenty years. Government incentives in this regard are also proving to be counterproductive for oil and gas companies. However, experts point out that high EV costs and unsustainable battery production are not going to affect the demand for petrol or diesel.
- New investments and diversification-
The oil and gas companies have often been criticized for old ways and means of doing business. Some of them are now looking to invest in new energy areas like carbon and hydrogen technologies. The shift in the workforce and the coming of a younger generation is expected to lead the diversification strategies in the new year. We are going to see more engagements with sustainable and alternative energy sources, and not necessarily green technology with the oil and gas companies in 2022. Tech and digital inputs are going to play a major role this year.
The Final Takeaway
2022 is going to be an important year for oil and gas companies. They are expected to strengthen their balance sheets and adopt strategies that will take them to the future. With the demographic profile changing from baby boomers to millennials and Gen Z, the need for cleaner and more responsible fuel sources will continue to rise in 2022. What do you make of our trends and projections? Do let us know in the comments section.