The last five years have been extremely dramatic for the companies in the oil and gas industry all over the globe. With decreasing profit margins, the oil companies are minimizing their capital expenditures which have led to layoffs and resulted in either cancellation or postponement of projects. The massive cost-cutting activities undertaken by the companies in the oil and gas industry is an alarming response that could affect the results of the future business cycles. To overcome these challenges in the oil and gas industry, the oil companies must reassess the organizational objectives by understanding the oil and gas market landscape. Plagued with existential crisis, climate change, fossil fuel issues, and the hype around minimizing carbon footprints, the oil companies must find an answer to the ultimate challenge – how to exist successfully in a carbon constrained world?
The Oil and Gas Industry: Overcoming Challenges
Organizations across the globe vouch to take actions to minimize global warming and limit the fossil fuel usage. With the limited availability of fossil fuel in the future, concerns over the use of non-renewable resources, exploratory activities, and the oil and gas industry’s attempt at creating a carbon-free economy have increased. This is why the oil companies must devise a plan to overcome the turbulence and market complexity to establish a new environment that encourages business stability and drives growth. What are the three steps to overcome the challenges in the oil and gas industry, you wonder? Here’s what,
- The oil companies must review their business strategies and organizational objectives by identifying their strengths and gaining a competitive edge over the other players in the oil and gas industry. Organizations must look for growth opportunities, adopt agile business models, and have a targeted approach, which can help them adapt to the dynamic market conditions. For instance, production and exploration have extremely different approaches where the former requires more investment while the latter involves high risk
- Oil companies tend to resort to massive cost-cutting, which leads to an uncertain organizational future. Instead, the companies in the oil and gas industry can direct their efforts and monetary resources towards growth areas to promote and enhance their capabilities. The oil companies must figure out competitive alternatives for oil and gas production by mining carbon footprints and adopting low-carbon technologies
- Companies in the industry must exploit and adopt advanced technologies to drive innovation, reduce costs, and create a sustainable environment. The technological advancements can eliminate the requirement for on-site checks by merely deploying remote monitoring for both on-shore and off-shore operations