Comment: Right time, right place
In spite of a few torrid years, the oil and gas sector has opened its arms to new technologies right on cue, writes Alaa ElShimy, managing director & vice president, Huawei Enterprise Middle East
In the conversation surrounding digital transformation, it’s fair to say the oil and gas sector wasn’t invited to speak. It’s been an incredibly challenging few years for the industry. The bouncing price per barrel, the global political rhetoric of moving towards more sustainable energy models, and the stark rise of large-scale industry-focused technologies making business digital have all contributed to nervous boardrooms at the world’s biggest oil and gas companies.
Swedish manufacturer Volvo announced that from next year, it wouldn’t be launching any car that isn’t electric or hybrid. Germany and France both plan to ban the internal combustion engine within the next 20 years or so. And many analysts are questioning whether or not the price of oil will ever see $100 per barrel again.
Call a spade a spade; the outlook for the last few years has been fairly bleak. Guy Stephens of Rowan Dartington last year said of the hydrocarbon giants: “If they fail to adapt to the changing landscape of future energy demands, they will find themselves confined to the history books.”
Frankly, I don’t buy this narrative. In fact, the Middle East in particular has been aggressively driving innovation throughout its oil and gas operations – taking full advantage of the ICT creations that address the entire industry chain. Exploration, production, storage, transportation and distribution have been fine-tuned to take advantage of digital transformation.
Just last November, we held the Global Energy Summit in Abu Dhabi, under the theme ‘Leading New ICT for Higher Safety and Efficiency in the Oil and Gas Industry’. More than 200 of our valued customers, partners and senior experts from the industry gathered to discuss positive developments and opportunities, and the tone was one of optimism and energy – so to speak.
What were we looking for in such conversations? To understand our collective plan to reduce costs, ensure safe operations, achieve sustainable development, and boost the industry’s transition into the smart era.
The competition is fierce, and this transition needs to be swift and smooth. When the curtains came down at the Global Energy Summit, the mandate had been set. The industry had opened its doors to new technologies. The task now is for global ICT companies to play their role in making this transformation happen.
The key will be transitioning to smarter operations, lowering manual input, and reducing risk in day-to-day task management. Today, the average oil recovery rate industry-wide is around 37%, and more than 70% of oilfield assets aren’t effectively monitored and managed. Worse still, 90% of incidents arise from man-made improper operations. These are labour-intensive and cost huge amounts of money for an industry that’s been struggling with bottom-line issues for a number of years now.
Along with many other industries, we identified digital transformation as the most promising pathway for confidently addressing these challenges. Huawei has spent many years gathering a deeper understanding of the oil and gas sector to better advice and act in this region. Through co-operating with more and more industry partners, we have successfully launched a number of ICT solutions in high-performance computing, digital pipeline, and enterprise operations management.
In fact, we’ve applied these solutions in 45 countries around the world, serving 70% of the global top 20 oil and gas companies. These projects demonstrate the ability the sector has to transform when served by the right partner ecosystem.
Typically, the industry is slow to adopt. That might come down to its historical wealth, which has protected it from the necessity of innovating. But nobody is under that illusion anymore, and these stark changes have been well received. Today, we’re living in an ‘innovate or disappear’ environment, and although the oil and gas sector has moved a little slower than other industries, it does now have the added benefit of understanding the rate of change, and the value of investment.
With that in mind, I am confident that the future, though different for sure, remains positive for the oil and gas sector.