The oil and gas companies operate within complex national and global frameworks. Although expansion into new geographies such as ultra-deepwater drilling is opening up new avenues for revenue growth, it is also simultaneously increasing the complexity and risk of business operations. Moreover, the dynamic regulatory frameworks imposed by various national governments on oil and gas companies is adding to the scrutiny within which oil and gas companies are operating in.
Additionally, factors like China’s gradual shift away from coal and an insatiable appetite for liquefied natural gas (LNG) will bring unusual challenges to the marketplace by the end of this year. In response, top oil and gas companies and industry leaders will need to review their strategy to factor in a widely anticipated slowdown in economic growth, an increasing focus on renewables, a likely trade war, and tension between the U.S. and Iran.
Oil and gas industry challenges 2019
Impact of trade wars
The 25 per cent hike in steel tariff that was meant to drive jobs back to the United States and encourage domestic steel producers has consequently led to a rise in the price of specialty tubing and pipelines. This has given rise to the possibility of cost inflation in future oil and gas projects and turnarounds alike. Increased steel costs eventually have an impact on the overall price of pipeline and will be reflected in a gradually increased price for products in the oil and gas industry.
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Reducing costs to remain competitive
Producing at a lower cost to stay competitive in the market is one of the key challenges facing oil and gas companies. Optimizing production systems and environmental utilities on the current operating sites is, therefore, a priority for oil companies. This would help maximize production efficiency, reduce the costs of extraction and refining and thereby offset the exploration costs.
In order to ensure sustainability, oil and gas companies are increasingly looking to extend the life of mature sites and are also compelled to seek new sources of oil or gas for which extraction, transport and refining are highly complex and costly. To achieve this, they also need to achieve 100% reliability of their plants which includes no unplanned shutdowns, increased output, and secure industrial assets.
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Employee onboarding and retention
With an aging and shrinking talent pool, oil and gas companies will have to invest more than ever to attract the best people to their business. Furthermore, as specialized experience lies predominantly with the older age groups, oil companies face critical challenges in recruiting and training the next generation and matching the staffing demands of a starved sector.
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