Abu Dhabi: The energy industry must commit to innovation in order to successfully navigate a period of significant change and uncertainty in 2016, according to a survey conducted by consultancy firm Booz Allen Hamilton.
Amid falling oil prices and new models of distributed power, oil producers and utilities need to adapt and react to market changes to secure the viability of their businesses as the market tightens, the consultancy firm said.
The survey conducted in collaboration with IDC, a global research firm also highlights the importance of cyber security to the energy industry, noting that it expects up to 75 per cent of industry players to have a full risk-based cybersecurity strategy in place by 2019. Booz Allen Hamilton says organisations will need to identify and manage threats well before they have direct operational effects.
The hydrocarbon industry is a critical one in the GCC — a region that accounts for nearly 40 per cent of the world’s oil production. According to International Monetary Fund estimations, the market downturn will result in a $287 billion (Dh1.05 trillion) loss in oil exports or around 21 per cent of the combined GDP for GCC suppliers, in 2015.
“The global oil industry is entering a critical period as it adjusts to the reality of sustained low oil prices and no foreseeable return to a $100 dollar barrel of oil,” said Dr Walid Fayad, Executive Vice President, Booz Allen Hamilton Mena.
“As a region dependent on revenues from oil, this new reality demands a response from GCC producers and exporters to create more resilient businesses able to withstand the market volatility and continue to deliver on major domestic social and infrastructure projects.”
Beyond driving down the net cost of oil production, the adoption and integration of technology can also disrupt energy across the value chain, positively impacting utilities and power generators in the region.
“Electricity demand growth of more than 8 per cent a year presents the GCC with an energy security challenge that threatens the continued economic development of the region,” said Dr Adham Sleiman, Vice President Booz Allen Hamilton Mena.
“Technology will be critical to installing and connecting the grid capacity the region requires whilst making the electricity system smarter, more efficient and more secure.”
Oil prices have plunged by more than 60 per cent in the last one year as production outpaces demand. GCC countries are diversifying their economies and focusing on innovation to cope up with the low oil price scenario.