Digital transformation in the oil & gas industry: Where to Invest?

24 March 2022 Consultancy-me.com 4 min. read

Technology has become one of the key strategic enablers of competitive advantage, and in the oil & gas industry, this is no different. But with a wide spectrum of digital investment opportunities on the horizon, oil & gas leaders face the challenging prospect of deciding where to invest first and next.

According to a new report from Strategic Gears, a Saudi-based strategic and management consultancy, the answer to where to invest can be viewed from two perspectives.

The first perspective is specific to the oil & gas industry, with company decisions mirroring other successful examples seen within the industry. The second strategy looks externally, focusing on which best practice digital approaches and technologies can best be ‘imported’ from other industries.

10 key Technologies from the 4th Industrial Revolution

The intended digital maturity and roadmap can be achieved by “hybridizing what to bring into your company in terms of best practices from both within and outside the industry,” spell out the experts from Strategic Gears.

Peer comparison

In the approach put forward, companies in the oil & gas sector can navigate their position relative to their peers on a wide variety of technologies, including robotics, artificial intelligence, blockchain, cloud and intelligent operations. After identifying where they stand, companies can assess gaps with their digital strategy and determine what steps need to be taken to complete their digital maturity journey.

Global leaders - SMEs

Adoption by global leaders

  • All major companies are investing into practically every technology.
  • The oil & gas is a solution-focused industry, rather than tech-focused. Therefore, leading companies are focusing on a wide range of technologies that contribute to achieving solutions as efficiently as possible.
  • Those solutions help companies to reduce costs, increase efficiency, improve training programs and create a safe and attractive work environment.

Progress in Implementing Digital Transformation by Industry

Adoption by SMEs

  • Due to the high capital costs associated with upgrades and technology adoption, SMEs are more cautious and conservative with digital transformation
  • The progress in sensors and the development of the internet of things has been capitalized on by SMEs.
  • Big data analytics has permeated into companies of all sizes and in all stages of the industry.
  • Both upstream service providers believe that robotics has a large potential impact in the future.

Cross-industry comparison

The second perspective looks into applicable technologies to be adopted in the oil and gas industry from those used in other sectors including financial services, manufacturing, healthcare and transportation.

Leading industries

The must-have investments

In their report, the authors from Strategic Gears pinpoint three digital investment areas which in their view is fundamental to success. The first is the environment, which is “increasingly dictating the future” of the industry. “Companies should be equipped at all times with the necessary digital tools to monitor their environmental impact and adopt technologies that help reduce CO2 footprints.”

Data mining – the process of harvesting and analysing data for strategic insights and enhance decision-making – is another of the ‘must-haves’. The authors highlight that the adoption of artificial intelligence and machine learning can provide benefits across the whole value chain, from upstream and downstream operations to internal processes.

Thirdly, at a time of a growing talent crunch, “it is important for companies to revisit their talent lifecycle in order to hire, develop, grow and engage their employees”. Digital can provide help in two ways: it can grow the effectiveness of recruitment and talent management; and automation of tasks can ease the reliance on manual labour while making jobs more meaningful.