The economic demand destruction triggered by the COVID-19 pandemic should propel the Middle East energy industry to accelerate its adoption of the 4th Industrial Revolution digital toolbox and embed greater operational efficiencies, according to Gulf Intelligence
The global energy sector, and the Middle East in particular, have been slow adopters of digital transformation strategies, which offer a new chapter in human development, enabled by extraordinary technology advances that commensurate with those of the first, second and third industrial revolutions.
Mark Moody-Stuart, a member of the Board of Saudi Aramco and the former chairman of the Royal Dutch Shell PLC, said in the GIQ Study, “This is a point where oil transforms into a normal commodity, like iron, nickel and copper, where low-cost producers dominate in market share and the higher-cost producers fill in the tail end – this has been coming for some time, but COVID-19 accelerated it,” Mark added.
Global investment in the energy sector is expected to plunge 20 per cent this year, or by almost US$400bn, compared to last year as the pandemic takes a beating on the energy sector, the International Energy Agency reported last week. Before the pandemic, the global energy investor sector was on track for growth of around two per cent, which would have been its largest annual rise in spending in six years.
“The adoption of the 4th Industrial Revolution digital toolbox in the oil and gas industry – globally, I think I would score 4IR adoption at about 7 or 8 out of 10. In the Middle East, I would say they are coming to 5 or 6 out of 10 because they are now getting more serious about it,” Dr. Satyam Priyadarshy, Technology Fellow & Chief Data Scientist, Halliburton, said in the report.
Gulf oil producers have announced a series of austerity measures since crude prices have more than halved in value since the start of the year. In alignment with this the region’s national oil companies, including Abu Dhabi National Oil Company, have notified contractors and suppliers that they will review existing deals to find ways to cut costs due to the steep slide in oil prices.
Digitalisation is already improving the safety, productivity, accessibility and sustainability of energy systems. It is changing markets, businesses and employment. New business models are emerging, while some old models may be on their way out.
