Digital in energy
Much has been written about the transformative impact of digitising operations in oil and gas. Oil and gas companies which have long been technology intensive at the well-head, are now beginning to extend their technological capabilities, especially digital capabilities, to the rest of their operations.
We conservatively estimate the use of digital technologies in the upstream sector could result in cumulative savings in capital expenditures and operating expenditures of US$100 billions by 2025. For instance, savings can be realised in operational excellence (more effective maintenance and better operation of assets); in the supply chain; and in the use of integrated platforms (connecting the organisation with external partners).
We believe there are some important guiding principles to consider when developing a digital business models:
- The solution needs to be a business-led exercise, identifying the greatest business challenges and assessing how digital can help.
- The digital transformation of a company needs to be holistic and address all the elements of the operating model.
- Building a digital organisation needs to encompass stakeholders beyond the company itself.
- There is no one successful digital template to follow.
- Getting the right weighting between technical and technology capabilities is critical.
Enhanced profit recovery
With the severe and complex domestic and foreign environments in 2020, especially under the impact of the COVID-19 pandemic, international oil prices and domestic refined oil prices have been in a state of volatility. Thanks to strict prevention and control measures, the domestic economy has recovered steadily. It is expected that China's economy will rebound rapidly in 2021.
Now that the international oil price has started to rebound in the early 2021, producers need to start thinking about how to deploy this cash sensibly back into the business. Companies should continue to focus on reducing operational costs to improve profitability and be well-positioned for future market swings.
PwC works with oil & gas companies throughout the hydrocarbon value chain from reservoir to consumer including exploration, production and service companies. We help our clients undertake deals that optimise value and minimise risk.
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