2022 Oil & Gas Forecast
Nearly half of the global population has already received at least one dose of the COVID-19 vaccination. Corporates are nearing the completion of their hybrid return-to-office strategies. The global economy is predicted to completely recover by the end of 2021. Oil demand, and hence mobility, has returned to 95% of pre–COVID-19 levels and oil has exited the $40–$60/bbl zone of uncertainty without hindering the energy transition. Companies engaged in the exploration and production of oil and natural gas (O&G) could not have asked for more.
However, oil & gas businesses have not remained immobile throughout the last year. As we approach 2022, significant change is happening as several businesses seek to remake themselves through the following:
- Practicing capital discipline (global upstream CAPEX is expected to rise by just 4% in 2021)
- Targeting financial soundness (4% debt reduction in 2021)
- Climate change commitments as more North American oil and gas businesses align with their European counterparts
- Modification of business models
The enthusiasm for such changes is mirrored in Deloitte’s poll, which found that almost two-thirds of O&G executives are very enthusiastic about their firms’ strategic adjustments. The industry’s transformation path has just started, and merely managing or riding oil price cycles are no longer viable solutions. Over the next 12 to 18 months, oil and gas strategists should:
- Simplify and optimize their resource portfolios
- Embrace and set strategic objectives for the energy transition
- Attract, train, and retain people in a tight labor market
Organizations that are purpose-driven, technologically enabled, and human-powered, with prudent interim objectives and progressive communication and transparency strategies, can make it happen. Five factors are anticipated to shape the industry’s path over the next 12 months. This includes:
- High oil prices that bolster plans for energy transition, confounding common knowledge
- ESG that has a greater role in mergers and acquisitions
- Evolving business models to allow a new age of energy
- Convenience and experience now serving as the new anchors for consumer attraction instead of fuel
- Providing greener jobs and differentiated benefit packages to encourage employees’ return and retention
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