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Editorial comment

At around this time last year, DNV GL published its outlook for the oil and gas industry in 2020, which was titled ‘New directions, complex choices.’ While the title of the report turned out to be very fitting for the year that followed, I’m sure that the experts at DNV GL won’t mind me saying that the COVID-19 pandemic presented unexpected roadblocks that set the industry off in brand new directions full of unimaginably difficult choices that were inconceivable at the time of publication. For a good case study on the challenges that our industry has had to face in the past 12 months, turn to p. 17 of this issue where Cryostar reflect on the chain of events that required quick adaptation and innovation within their organisation. It’s a story that most of us can relate to…

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The title of DNV GL’s oil and gas industry outlook for 2021 is ‘Turmoil and transformation’. The report predicts that the oil and gas sector will double down on transformational investments, despite the crash in confidence seen last year following the COVID-19 pandemic. The new research, compiled from a survey of over 1000 senior industry professionals and executives, notes that 66% of respondents have reported that their organisation is actively adapting to a less carbon-intensive energy mix this year, with just 21% expecting to increase investments in oil projects. Meanwhile, 37% of respondents foresee an increase in natural gas investment.

Tellingly, just 39% of senior oil and gas professionals report that they are confident about industry growth in the year ahead, compared to 66% in last year’s survey. It’s unlikely that President Joe Biden’s recent decision to rescind the permit for the Keystone XL pipeline (and an imminent raft of new climate executive orders) will fill the survey respondents with much more optimism.

However, interestingly, DNV GL notes that while cost-cutting will be a universal priority for the oil and gas sector in 2021, its research suggests that the industry is not planning to cut spending to the same extent as it did following the downturn in 2014. Back then, just 43% of respondents expected to maintain or increase CAPEX in the year ahead, while that number now stands at 62% for 2021 (although this is down 10% on the previous year). DNV GL suggests that many organisations may be looking to long-term transformation investments that will decarbonise the industry. “Companies are betting long-term when making transformational investments, aiming to navigate the multiple transitions taking place at different speeds around the world. While we see a crash in confidence for industry growth in 2021, we see growing confidence in the opportunities that lie in a decarbonised future,” said Hans Kristian Danielsen, Vice President, DNV GL.

As ever, our industry must rise to the challenges that lie ahead, and continue to innovate and adapt. As Danielson concludes: “Decarbonisation has moved from something on the horizon to an immediate priority, and there are signs that our sector may invest to transform rather than cut its way out of the present crisis.”

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