New research published by DNV GL finds that the oil and gas industry expects to boost investment in the energy systems of the future this year, as companies seek to transform for the long term.
A record two-thirds of senior oil and gas professionals report that their organization is actively adapting to a less carbon-intensive energy mix in 2021, up from just 44% in 2018. Some 57% plan to increase investment in renewables, up from 44% last year, about half expect to increase investment in green or decarbonized gas.
Just a fifth (21%) say they will increase investment in oil projects in 2021, as the sector increasingly comes to terms with the notion that the world’s demand for oil has peaked or will peak in the short to medium term. Expectations for an increase in natural gas investment remain steady at 37%.
The majority of senior oil and gas professionals expect these shifts in investment will lead to a wider reshaping of the industry. Eight-in-ten (78%) believe there will be increased consolidation in the year ahead, up from 64% one year ago. Strategic reorientation may also involve asset and business sales, with 63% expecting more demergers, divestments and spin-offs, up from 46% last year.
Transformational investments come despite a crash in confidence for industry growth following the Covid-19 pandemic and subsequent oil and gas market crash. Only 39% of senior oil and gas professionals are confident about industry growth in 2021, down from 66% last year.
Turmoil and Transformation, DNV GL’s outlook for the oil and gas industry in 2021, suggests priorities are shifting as investors reassess the risks of financing oil and gas projects, and as governments and industry pour billions into green recovery strategies following the Covid-19 pandemic. The research is based on a survey of more than 1,000 senior oil and gas professionals and in-depth interviews with industry executives.
“Net-zero climate policies began to proliferate in 2020, from Europe to China, and made it onto the table in the US. Long term, net zero policies have the potential to drive deep decarbonization of the world’s energy system, and they are already changing the direction of the oil and gas industry,”said Remi Eriksen, Group President and CEO of DNV GL.
