PwC Africa has released a report suggesting what oil companies could do to cope with tumbling commodity prices and over-supply, geopolitical events, and the growing momentum to replace fossil fuels with cleaner energy sources. The report proposes a framework that could help companies successfully navigate an increasingly complex and volatile global market over the next five to fifteen years. The framework evaluates four potential futures, where the level of disruption and the pace of change fluctuate.
1. The oil and gas sector evolves along current lines with limited government intervention. Ongoing price volatility across pricing and demand presents funding challenges, encouraging greater collaboration between operators and service providers to drive efficiency and reduce cost. Gas increasingly becomes an essential transition fuel. 2. Demand from energy consumers (retail & commercial) for cleaner energy drives the transition towards a low carbon world resulting in significant private investment in low carbon technologies. The link between economic growth and energy intensity breaks. 3. As governments follow through on COP21 with regulation, incentives and direct investment, it drives increased energy efficiency, expansion of renewable energy demand and accelerated development of disruptive technologies. This puts further pressure on fossil fuel providers who need to find new ways of working. 4. Supply constraints are triggered through direct government action, such as implementing carbon legislation or withholding licences (e.g. shale, arctic), or geopolitical disruption, which can also contribute to increased volatility on a periodic and regional basis.