It’s been quite the year in the Oil & Gas industry – as a business what activities have occupied most of Rystad Energy’s time over the past eleven months and what kind of support are energy clients looking for?

We continue to support our clients on topics related to the Energy Transition. Oilcos stick to their plans and seem to have wholeheartedly embraced the transition and the opportunities that come with it. Hereunder, we explore step-outs and help pursue decarbonization efforts in existing portfolios. However, we are also seeing a meaningful amount of concern being raised on the capacity of the O&G supply chain. As the next investment cycle is forming, and the supply chain has shrunk in capacity since the 2014 downturn, bottlenecks are presenting themselves.

Other than that, all our conversations and engagements have elements of geopolitics and how societies best should solve for Energy Reliability, Affordability and Sustainability at the same time. 

What trends and activities are you seeing across industry as a result of the Ukraine war?

The war, the energy acquisition sanctions and the corresponding price hikes of gas – and to a lesser extent oil – have provided a positive investment signal for everyone with non-Russian hydrocarbon pools in their possession. That said, while many default to thinking this must bode well for the activity that is exploration to prove more hydrocarbons, we are seeing the primary focus being to bring production onstream quickly and to enhance uptime, rather than to explore for future volumes. As such, the focus is on short cycled resource pools.

Moreover, we are seeing the LNG value chain heat significantly. Luckily, China has not been consuming LNG at the pace they used to due to their Covid lockdowns, which has allowed Europe to capture a large share of freely traded LNG. Europe has impressively been able to quickly build the regasification capacity, while the big question is how quickly the exporters – most notably US – is able to ramp. The paradox here is that while Europe desperately needs US to build its gas liqeuefaction infrastructure, EU continues to be vocal about the diminishing role of gas in the medium to long term. Such narrative, and the reluctance to take long term contracts that comes with it, may be a hinder for the US to invest in its capacity.

Rystad Energy will be delivering a keynote presentation at the World Energy Capital Assembly entitled ‘A pragmatic approach to decarbonisation’ – what can the audience expect to hear about here and what kind of themes will you be hitting on?

I will share our latest observations on the state of the energy markets and give our perspective on how the energy trilemma is impacting investments in across the energy sector. Moreover, I will point to leading indicators on the pace of the energy transition and discuss the role of oil and gas during this transition. 

Staying on the decarbonisation theme and as an organisation with a global footprint how do you advise and support clients in different regions when the energy transition inevitably looks different and regional challenges and issues need to taken into account? 

Well, from an O&G perspective – and independent of region – the energy transition calls for you to build a resilient (/cost efficient) portfolio with optionality (several short cycled investment opportunities rather than big ticket items). So this is a red thread.

However, it is also important to recognize which regions that hold the most resilient resource pools and which ones have the more supportive stakeholder set. Therefore, again from an O&G perspective, it is important to be in the right regional markets.

It is also important to recognize that an Energy Transition Strategy doesn’t have to mean stepping out into new forms of energy. It can also very much be about equipping yourself with a set of value propositions on how to decarbonize traditional oil and gas. 

Rystad Energy are a Knowledge Partner for the World Energy Capital Assembly 2022, held in London on 28-29 November. Lars will also be presenting an industry keynote on Tuesday, 29 November on ‘A Pragmatic Approach to Decarbonisation'.

28 – 29 NOVEMBER 2022 | LONDON

THE MEETING PLACE FOR SENIOR ENERGY EXECUTIVES, INVESTORS & FINANCIERS TO FIND INVESTMENT AND DO DEALS