Upstream supply chain faces up to new challenges electricity trading jobs


Global upstream spend is up from lows of U.S.$450 billion in 2016 and 2017, having collapsed from the 2014 peak of U.S.$750 billion. But not by much. We think spend will recover to over U.S.$500 billion by 2020, driven by the U.S. Lower 48, a flurry of deepwater projects and a new phase of liquefied natural gas investment. It’s a sluggish recovery, geographically very patchy, and a long way from being called a new boom.

Second, there’s a lot of excess capacity in the service sector. There has been rationalization – global capacity across the sector reduced by around 25% on average 76 gas card login since 2014. Yet capacity utilization is still modest, based on key indicators like jackup rigs (70%) and floating production system fabricators (50%). The spend increase we forecast won’t tighten most markets and bring back pricing power. More capacity needs to come out.

Third, we’re starting to see disruption in the sector. Integrated oilfield service providers have become integral to the upstream industry, particularly on more complex projects. Digitalization threatens this relationship. Cloud-based platforms that can manage multiple types of data and simplify data management gas x ultra strength directions will break down value silos. This will negate the need for different, proprietary systems that are the domain of the service companies. Increasingly, operators will be able to measure and benchmark all facets of their operation, opening the electricity production in usa way for a new approach.

Big tech companies with cloud computing and advanced analytics are attracted to upstream as a high-margin industry with giant data management needs. Innovators are already emerging in autonomous robots, drone sensing and surveillance, automated drilling control and other specialisms. Our research will delve deeper into the implications of digitalization in the coming weeks.

Exploration and production companies reacted to the downturn by revitalizing their business. Operators have reset portfolios aggressively: cutting costs, making portfolios more resilient by shedding higher cost assets and investing sparingly for the future in higher return, low-cost projects. Critically, executive pay for many oil and gas is now more closely linked to returns rather than growth. The reset is already paying off with much-improved profitability and cash flow. The sense is that there’s much more gas appliance manufacturers association to be done to protect against future uncertainties such as peak oil demand and the energy transition. Digitalization is one of the big opportunities for ongoing cost reduction.

What can service companies do to improve performance? The big integrated oilfield service providers chose the consolidation route in the downturn, building on the one-stop-shop model. The idea was that scale and market concentration in key business segments would help bring pricing power and drive returns up. In a market that’s still lean, it hasn’t panned out 4 gases in the atmosphere like this.

The simple option is to wait for the investment cycle to pick up. That could take some time, and risks courting antipathy from investors. If the market stays lean, the sector needs to embrace tighter capital discipline and deeper cost cuts to boost returns and show that the integrated model can work in a difficult environment. Just as the oil Majors have begun to focus on advantaged assets, the bolder service companies could take a long hard look at the merits of the business model. Should capital be tied up in fragmented, fiercely competitive segments with gas mileage comparison low margins?