A new study by the Boston Consulting Group (BCG) has said that the oil and gas industry is in the middle of a value creation crisis and has delivered subpar shareholder returns for the past decade and leveraging digital technology could improve profitability.
Titled Digital Powers Value Creation in Oil and Gas, the study stated that with the collapse in energy demand as part of the economic fallout of COVID-19 pandemic success in leveraging digital technologies is critical in transforming legacy businesses to achieve a step-change in performance and innovating business models to tap into new value pools.
To evaluate the industry’s digital maturity, BCG recently conducted a Digital Acceleration Index ( DAI) study of almost 50 companies using a combination of online surveys and deep-dive interviews.
Oil and gas poor performance compared with other industries showed up in the DAI results. No upstream oil and gas company scored high enough in the survey to classify as a digital leader. That is somewhat surprising given that nine out of ten respondents said they have a digital vision for the company, and two out of three said they have clearly defined digital ambitions.
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Last year, Rystad, an energy research firm analysis report showed that the global oil and gas industry can save as much as $100 billion through automation and digitalisation in the 2020s. The efforts could help cut about 10 percent of the $1 trillion spent in 2018 on operational expenses, wells, facilities and subsea by more than 3,000 producers.
In Nigeria, some oil companies have been leveraging digitalisation and automation to keep operating expenditures (OPEX) low, make processes repeatable, auditable and to shorten opportunity maturity cycles by more than 60 percent. This has also led to efficient oil well stock inventory management.
