The importance of adopting a new business model by national oil companies to provide a carbon-neutral future

Dubai – The Boston Consulting Group (BCG) in a recent report entitled “The Future Operating Model of National Oil Companies” emphasized the need for National Oil Companies (NOCs) to pay attention to the development of their operating models and linking them to achieve their strategic objectives in a very clear manner, to achieve their visions related to By improving productivity, anticipating expected future expenditures and contributing to efforts aimed at greenhouse gas emissions reduce. The survey illustrates the importance of adopting simple operating models, which contribute to the improvement of productivity efficiency by 30-40% over the initial value chain of oil and gas companies. This track includes the adoption of new tools, such as the application of more accurate models, and focuses on their role in improving the productivity of resources extracted from wells by 4-6%, while time through proactive design and evaluation processes by 80%.

“Transformation efforts require a new business model, with a detailed roadmap, a dedicated team with clear responsibilities, innovative and transformative management, advanced risk assessment capabilities and supporting IT systems,” said Björn Ewers, Managing Director and Senior Partner, Boston Consulting Group NOCs must therefore focus on adopting an integrated transformation approach across key business areas, including activities and operations, new ways of working, digital transformation and technological innovation, and efforts to reduce carbon emissions. “

Additional ingredients in this framework include the adoption of artificial intelligence / machine learning models and digital twins, to identify non-production related processes, and to improve oil extraction processes, which can be positively reflected by increasing production by 2-6%, and reducing the operating system. expenses related to drilling and exploration activities By about 25%. By adopting a maintenance and predictive management approach, uptime improves and reduces maintenance expenses by 15-25%.

“The shift to low-carbon energy resources is fundamentally reforming energy production and consumption strategies, and Middle East NOCs have so far pioneered this evolutionary trend – by expanding their industry ranges,” said Szabolex Mialek, partner and co-founder. Director, Boston Consulting Group To include alternative energy fields, and to approve investments related to the reduction of carbon emissions, the reduction of carbon emissions from natural gas extraction

Liquid (LNG). The presentation of COP27 in Egypt and COP28 in the UAE in 2022 and 2023 will highlight NOCs in Africa and the Middle East to review their practices related to addressing climate challenges.

International oil companies (IOCs) are clearly transforming their operations. Returns to shareholders in oil and gas companies also witnessed a significant decline, after decades of maintaining a long-term upward growth trajectory on the S&P index, during investment periods spanning 3, 5 and 10 years with an unclear prospect. The international oil companies have realized the unsustainability of the current initial operating models, as the volatility of oil prices, oversupply and the shift in dependence on energy sources are driving them to work to develop their operations in line with the current landscape. Although strategies differ at the level of individual portfolios, success in developing future models requires completely different business strategies. The reality of national oil companies is similar to their international competition, which requires radical transformations in this context.

Transform the operating model of oil and gas companies through 3 steps:

1- Transform the way you work

It begins by redefining the company’s business philosophy – a term that includes its vision, mission, principles, goals and business practices. NOCs will need to link spending and carbon emissions into their operating philosophies. This may include the adoption of an austerity approach to improve operations, reduce waste and increase the value of services provided to customers. This approach can center around major operational shifts, such as conducting remote operations.

2- Streamlining basic operations and rationalizing activities

It starts with streamlining basic production, maintenance and safety processes. It reduces unnecessary processes, avoids repetition of tasks, and makes full and integrated use of newly available technologies and information. This approach also includes reducing the level of unnecessary routine operations. At this stage, companies need to improve corrective maintenance operations versus preventative maintenance work, and plan and repeat preventative maintenance operations. The time is perfect to re-examine and streamline IOPs, patch gaps and reduce less critical work.

3- Develop a comprehensive digitally-activated future business model

Digital transformation and its benefits, including big data, predictive analytics, robotics, artificial intelligence, machine learning, and the Internet of Things offer capabilities to enhance and enable every aspect of oil and gas operations. The third step in the transformation journey is to develop an inclusive and digitally-activated futuristic business model. This means building advanced capabilities and making full use of the range of digital tools. In this context, companies need to improve their ability to transform at a rapid pace, from local pilot programs to integrated scale implementation to maximize impact.

“Innovative projects in this sector are evolving at an accelerated pace, providing NOCs – and countries that depend on their revenues – with long-term capabilities to facilitate the adoption of green solutions,” said Jean-Christophe Bernardini, partner and co-founder. director, Boston added. Consultation group.

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About the Boston Consulting Group

The Boston Consulting Group works with a wide range of partners in various business, social and economic sectors to help them identify and solve challenges and exploit the best opportunities available. Since its inception in 1963, the Group has pioneered business strategies and today works closely with its clients to support their transformation efforts that bring tangible benefits to all stakeholders, as well as enable organizations to grow, build sustainable competitive benefits and make a positive impact. create. in societies.

The company’s diverse and global teams have extensive experience in various sectors and fields, as well as advanced insights and ideas designed to reevaluate the status quo and always bring about positive transformations. The company offers advanced solutions in the areas of leading management consulting, modern technologies and design, as well as institutional and digital projects. The company is characterized by its collaborative work model that covers all levels and requirements that customers need, and this model is strengthened by the constant striving to support customers to thrive and grow and enable them to make the world a better place. to make to live and do business. .

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