indirectly shape the future of the Chinese oil and
gas industry.
2.1.2 Future Trends in the Oil and Gas
Industry
The oil and gas sector faces new trends that could
induce change in business strategy and companies’ organisational structure. Trends have
always arisen to create new challenges and
opportunities in the oil and gas sector, as the
discovery of new resources, technologies and
political shocks have changed the fundamental
characteristics of the market. For example, the
emergence of powerful state-owned oil companies in the 1960s and 1970s forced many international oil companies to transform their
business models to focus on megaprojects in
hard-to-reach places. The future appears to hold
even more substantial changes due to advances in
technology and decarbonisation, which have
already begun to affect energy markets and will
become more prevalent over time. Oil and gas
companies are already considering changing their
strategies and organisational models in response
to these trends and will need to continue to do so
in the future.
This report focuses on the two main trends
facing the oil and gas sector: (1) structurally
lower oil and gas prices, and (2) an increasing set
of disruptive technologies. The trend of structurally lower prices reduces margins and makes
high-cost supply uncompetitive. It is already
occurring, as new shale resources continue to
increase supply, and is likely to strengthen as
decarbonisation policies reduce fossil fuel use.
Several technology disruptions are also impacting the sector, including those driven by digitalisation and increasing low-carbon R&D flows.
These can rapidly shift value within the energy
sector, which will require oil and gas companies
to be more versatile if they are to capitalise on
opportunities in areas of new value and avoid
risks in areas of declining value. This report
examines the broad impact of these shifts in
business strategies, and the implications for
future organisational change within oil and gas
companies (Fig. 1).
Companies will need to understand the
implications of these trends and how to respond
best to them in order to thrive. It is possible to
draw parallels between the trends facing the oil
and gas industry today and the trends that other
sectors have already experienced and responded
to. This report aims to use the learnings from
cross-sectoral responses to better understand the
possible set of strategic and organisational
Fig. 1 Structural shifts will alter the business strategies and organisational structure of oil and gas companies
52
W. Xiaoming et al.
gas industry.
2.1.2 Future Trends in the Oil and Gas
Industry
The oil and gas sector faces new trends that could
induce change in business strategy and companies’ organisational structure. Trends have
always arisen to create new challenges and
opportunities in the oil and gas sector, as the
discovery of new resources, technologies and
political shocks have changed the fundamental
characteristics of the market. For example, the
emergence of powerful state-owned oil companies in the 1960s and 1970s forced many international oil companies to transform their
business models to focus on megaprojects in
hard-to-reach places. The future appears to hold
even more substantial changes due to advances in
technology and decarbonisation, which have
already begun to affect energy markets and will
become more prevalent over time. Oil and gas
companies are already considering changing their
strategies and organisational models in response
to these trends and will need to continue to do so
in the future.
This report focuses on the two main trends
facing the oil and gas sector: (1) structurally
lower oil and gas prices, and (2) an increasing set
of disruptive technologies. The trend of structurally lower prices reduces margins and makes
high-cost supply uncompetitive. It is already
occurring, as new shale resources continue to
increase supply, and is likely to strengthen as
decarbonisation policies reduce fossil fuel use.
Several technology disruptions are also impacting the sector, including those driven by digitalisation and increasing low-carbon R&D flows.
These can rapidly shift value within the energy
sector, which will require oil and gas companies
to be more versatile if they are to capitalise on
opportunities in areas of new value and avoid
risks in areas of declining value. This report
examines the broad impact of these shifts in
business strategies, and the implications for
future organisational change within oil and gas
companies (Fig. 1).
Companies will need to understand the
implications of these trends and how to respond
best to them in order to thrive. It is possible to
draw parallels between the trends facing the oil
and gas industry today and the trends that other
sectors have already experienced and responded
to. This report aims to use the learnings from
cross-sectoral responses to better understand the
possible set of strategic and organisational
Fig. 1 Structural shifts will alter the business strategies and organisational structure of oil and gas companies
52
W. Xiaoming et al.