It’s been a successful 2023, in which the oil and gas industry has continued to win back investors and position itself as a key player of energy transition. This article looks ahead at four trends in 2024 proving to be a year full of opportunity and challenges.
We’d like to offer the following insights from EY.
- Transformative Deals—While high interest rates and inflationary pressures cooled deal-making in many sectors in 2023, the oil and gas sector has seen a surge in announced M&A activity, driven by strong cash flows, renewed investor confidence and increasing recognition that oil and gas will continue to play an important role in the energy landscape. A wave of consolidations and strategic investments in low-carbon solutions—such as carbon capture, hydrogen, renewable natural gas, and others—will continue in the year ahead, as creative deal-making, partnerships and ecosystems emerge.
- Emissions Management—With stringent new climate disclosure rules set to take effect in the EU, California, and potentially across the United States, 2024 looms as a crucial staging year for both the industry and their extensive supply chain. This regulatory uptick has led companies to accelerate efforts to reliably monitor and report emissions; however, the shifting in thinking from compliance to innovation in future commercial opportunities will be front and center. For example, how the industry considers product differentiation and less carbon intensive products.
- Decarbonization Technologies—The oil and gas industry has responded to federal incentives for emerging energy technology, particularly in hydrogen and carbon capture. Oil and gas companies bring a unique level of financial wherewithal, technical skill, and foresight in driving these new solutions forward. However, while legislation like the IRA and IIJA provide incentives and funds for developing these technologies, it is largely dependent on participants to create demand. The real winners of the IRA and IIJA will be those companies that can best innovate new commercial approaches to these novel business areas.
- Maximize Operations—Maximizing operations throughout the enterprise by using disruptive technology at speed and scale, all while upskilling the workforce, will be important as companies transform. By focusing on operational efficiencies, the oil and gas industry can continue to solve complex issues while integrating new acquisitions, implementing emerging technologies like AI, and utilizing real-time data and connected strategy to enable better, faster, and more strategic decisions with the impact on its workforce.