The upstream sector includes searching for underground crude oil and natural gas fields, drilling exploratory wells, and subsequently drilling and operating the wells that recover and bring the crude oil or raw natural gas to the surface. The midstream sector involves the transportation, storage, distribution and overall logistics of the crude. Upstream is the largest business in the oil and gas value chain with four key types of industry players: international oil companies (IOCs), national oil companies (NOCs), independent exploration and production (E&P) companies and oilfield service companies.
This industry segment stands out through the immense complexity of the engineering challenges to search for and produce the hydrocarbons. As most of the world’s oil reserves are concentrated in only a few countries, the balance of the industry power has shifted in recent years to government and state-controlled oil companies.
This industry segment’s economic success is predominantly driven by the oil price and therefore used to the highs and lows of economic cycles. The growing impact of the net-zero carbon ambitions now combined with the current COVID-19 crises however, led to a total new landscape with demand and prices for crude falling significantly. With the survival of many companies at risk, coupled with a potential longer-term decline in petroleum demand for various reasons, the next decade could look very different for the oil and gas market.
Significant investments in the past decade and increasing shale technology resulted in an increase of crude oil supply. Especially IOC’s shifted financial resources from downstream assets into upstream and now fail to see the expected returns. At the same time, demand stopped to grow, resulting in lower crude prices, putting earnings significantly under pressure. Furthermore, a growing awareness for socially responsible and environmental-focused investing could mean that upstream capex will most likely remain flat over the next years.
Overall, the 2020 crisis and the oil downturn have in fact accelerated the long-term trends like energy transition and digital transformation. Still, the upstream segment will stay very relevant for the overall economic growth as it will continue to create value for most companies, especially with the oil price and general activities picking up again.
That is why action must be taken now, and Consistency is able to help with the key Upstream topics; current and planned projects need to be evaluated on their environmental, social and corporate governance credentials before moving ahead. An overall portfolio analysis will result in certain strategic (growth) decisions that can be executed organically or inorganically. We can also support large-scale transformations towards more agile or digital organizations, which is crucial to pave the way for most companies’ diversification into low-carbon energy. With a broad focus on operational excellence, asset turnaround and transformation support, we provide a very differentiated offer to our customers.
The refining business is in transformation. Characteristics are the adoption of decarbonizing technologies at pace and the need to fundamentally re-think business models due to the megatrend towards energy convergence. Factors driving change are a greener & circular Energy and Chemicals system, a more informed and demanding customer base, the permanent emergence of digital innovations and the growing challenge to retain the expert and leadership resources against demographic trends and the rise of new skill sets. Due to consumer and legislative pressure, the transformation towards low carbon and more eco-friendly operations is irreversible.
Many industry strategists agree in a geographic split between global regions. On the one hand, there appears to be a promising long-term business outlook and petroleum demand in the non-OECD markets, in ASIA, Africa and Latin America, based on robust business growth expectations. On the other hand, in the OECD markets Europe and North America the refining players started corporate wide transformations to meet the NetZero Carbon 2050 target with e.g. green fuels and green hydrogen, to further deepen the petrochemicals molecule integration and to explore all Industry 4.0 optimization technology supported by agile cultural change.
Regardless of these regional differences, there are common business trends across regions:
Growing sustainable value of every molecule creates pressure shifting towards higher integration with PetChem & Specialities
Volatile global crude, intermediate and product markets require advanced commercialization and international trading strategies
Mature refining markets lead to continuous asset portfolio consolidation and innovation & cost pressure
Rapid development of digital, connected plant and Industry 4.0 is enabling new ways of optimisation
Competition for the new generation of talents drives agile and new ways of working
To successfully manage their highly complex issues, refiners are not only facing enormous technological changes, but above all need a fundamental cultural change. New forms of cooperation, lean management processes and the ability to organize oneself are essential to make rigid process flows more flexible, overcome unnecessary hierarchies and silo thinking and establish efficient agile forms of work.
With multiyear deep industry expertise, methodological reliability and with trusted implementation competence in both classic and agile project management, consistency creates powerful results and reliable solutions. We provide to our customers a differentiated offer in the market, with a focus on portfolio strategy, operational excellence, supply chain excellence, and overall transformation program support. For a broad and integrated offering, we are collaborating in the global Energy Ecosystem e.g., with leading digital partners, well-known market forecast and financial institutes, leading digital- and specialized industry technology partners.
The smart players in the industry have opportunities to succeed if they are able to anticipate and drive the industry evolution. This requires an agile culture and organization to adopt business models and customer value propositions.
Alternative fuels, with individual profiles of strengths and weaknesses, drive retail site complexity and operational cost, whilst the integration of dispensing systems in the outlets is constrained by limited space, logistic infrastructure and safety regulations.
In the retail sector, disruptors with highly innovative web-based business models and visionary mindsets have successfully captured business from traditional retail formats, including the convenience retail industry. This trend is far from ending any time soon, as grocers and other retailers begin to enter the convenience industry, to respond to internet-based disruptors and to pure play convenience store chains that expand in their business.
Now it is time to transform business in a game changing way by creating new customer journeys that lead to meaningful differentiation versus digital disruptors. These include design of state-of-the-art customer journeys, operational excellence, as well as transformation support.
With multiyear deep industry expertise, methodological reliability and with trusted implementation competence in both classic and agile project management, consistency creates powerful results and sustainable solutions. We provide to our customers a differentiated offer in the market, with a focus on portfolio strategy, operational excellence, supply chain excellence, and overall transformation program support.