I am extremely pleased to share the first Quarterly Review of 2018, our quarterly insight form around the world that looks at the trends that are shaping the future of energy companies today.
How will 2018 unfold? What we now know unequivocally is the energy transition is here. It’s cascading across every continent that our members operate within, causing wide-scale revaluation of business models, and redefined relationships between industry and society.
The Council believes the megatrends impacting energy are NOT transitional. This simply applies a ‘hop’ from one from energy source or business model to another. However, the megatrends driving the industry are not quite as liner, and frankly as convenient as that. Climate change, digital disruption, resource security or abundance in some cases impact countries very differently. What we have is less of a soft transition, rather whole sector transformation. The change is rapid and has already altered strategic planning. Take Europe, where traditional oil companies are buying licences to sell electricity to C&I customers. In Africa, we are witnessing more integrated GTP projects, and in Asia LNG suppliers are prepared to part fund power plant developments. This is an Energy Convergence, and new models are taking shape each week.
What we have seen over the past quarter is adaptability and a company’s ability to quickly seize new opportunities remains as critical as ever – both for companies striving to become energy leaders in the new converged world, and for business leaders who are transcending both old and new world orders. What has clearly changed is that focus relies as much on ICT, as it does on basin opening plays. That within itself is a paradigm shift from the past. We see reference to that throughout this Quarterly Review.
It is clear we are now entering an exciting, unprecedented time in technology – with the pace of digital disruption in energy continuing to accelerate. So soon after the shale revolution, we are poised to drive some of the biggest changes to the way we operate since the 1970s (and some people say this is a slow moving industry!). Technology and digital disruption will continue to transform the way we operate, raising many questions about both opportunities and challenges.
Looking at the feedback from our network over the past three months, I firmly believe that these innovations are a force for positive change, because they are creating more flexibility in how we meet future energy demand, both for traditional fossil fuels but also renewables. While there are many risks, such as reskilling, we once again have an element of margin control with the efficiency gains associated with these new technologies.
When reading the contributions made from around the world, it is apparent that global megatrends are impacting business behaviour differently throughout the world. Whereas in Europe we see convergent forces pushing IOCs into distributed energy, the same factors are the catalysts towards liberalisation in energy markets through Africa and much of South America.
This nicely leads onto Latin America. The region has unequivocally been the source of more attention than any other part of the world from our membership over the past 18 months. Game changing energy reforms, play-opening discoveries and established world-class companies are all part of the story. It is therefore timely that we focus on Mexico in this Review. Heading towards the July 1st Presidential elections, we take stock of the landmark reforms introduced by President Enrique Peña Nieto four years on.
In this ‘new normal’ environment, our members must be at the forefront of change, and evolve with the industry. Their continued success will always lie in their ability to move with the times and respond proactively to the challenges ahead. We hope that you enjoy the review and we look forward to talking with you, listening closely, and seeing you all as 2018 unfolds.