At the Oil & Gas Future Forum on 27 October, we gathered some of the top minds in the industry to discuss the most important challenges of our time. Spread across three panels, oil and gas experts from across the globe explored the role of OPEC in the 2020s and beyond, the shifting cybersecurity landscape, and the role of the oil and gas industry in the energy transition.
If you weren’t able to attend, you can find some of the highlights in this article, and make sure to check our website periodically and subscribe to our daily newsletter to get more exclusive insights from the forum, or to see the full interviews! Please note that the interviews and panels have been edited for length and clarity in this issue.
Watch the full video or read the highlights below
Panel 1: Is OPEC relevant in the 2020s?
How would you describe OPEC’s role ?Â
Mohammed Sabban: OPEC and OPEC+ are doing a great job in the oil market as far as the OPEC+ agreement. I know there are some members who are not abiding by their commitments, but they have promised to compensate before the end of the year. The role of OPEC+ will continue to be crucial during this crisis. This crisis has been a surprise to OPEC. When it started, they were in the course of enjoying high oil prices. and then prices went down to as low as $16 per barrel.
Sara Vakhshouri: We have significant uncertainty when it comes to demand. We do not know when demand is going to recover, how fast, or if there are any threats to demand going back again to a significant global lockdown… OPEC+ is producing the majority of supply in the market, so having them together, deciding on production, gives us certainty in the market. When OPEC+ failed to agree on a production cut, the market entered into chaos. We had a free market where everyone was trying to produce at maximum level, the storage tanks filled up and we saw the collapse of oil prices, even occasionally to negatives for certain oil contracts.
Do you think OPEC is relevant in what looks like a vastly different future for the oil and gas industry?
Herman Wang: OPEC released its World Oil Outlook the other week, and for the first time, OPEC acknowledged the possibility of peak demand. They projected out to 2040, 2045… and we see that in stark contrast with the likes of BP and Shell and some of the other oil majors that are predicting a much faster energy transition. Obviously, there are vested interests on both sides of those outlooks. But OPEC has for the longest time said that even in a declining market, even if this idea of peak demand were to happen, they’ve got the lowest cost of production. And so they really will be the last producers standing in this world.
Sara Vakhshouri: …It seems that the first target of the climate change and energy transition topics is black oil, which is mostly heavy oil produced in the Middle East. And OPEC producers are producing with the lowest cost in the world. If we are living in a world where the oil prices are very low, the last barrel would come out of, let’s say, Saudi Arabia, because the price of producing oil is very low. But climate change regulations are set in a way that the peak for heavy and black oil is coming way faster than the light oil that is produced in the United States, let’s say, or outside of OPEC countries.
Do you expect the results of the U.S. election to impact global trade and in turn, OPEC?
Ole Hansen: We know what we have now [under Trump]. The market right now is trying to speculate what what will happen if we do have a President Biden… I think [we could see] a stronger regulatory environment which potentially will slow the recovery in U.S. oil fields. At the same time, from a growth perspective, it could have a negative impact because it could send prices higher after November third. That is actually counterproductive at this stage where we don’t need more production, we need stable production…
Herman Wang: We have seen Trump tweeting at OPEC, warning them about high oil prices and warning them not to cut production too much. Just talking with some delegates in OPEC, those tweets weren’t welcomed, that interference in their affairs. It stirred up a lot of their meetings. Then we had the price war and Trump took the opposite tactic and he got OPEC and Russia back together to put a floor under prices and force an agreement. Trump has played a very activist role with OPEC. I would not expect that kind of activist role by a Biden administration. But on the same token, relations between the US, Saudi Arabia and other key members of OPEC are still going to be largely based on oil diplomacy.
Session 2: Safety in a crisis: Cybersecurity during and after COVID-19
When the pandemic started, what were the biggest concerns for you in terms of cybersecurity? Â
Khalid Alharbi: The COVID-19 pandemic introduced unparalleled challenges. A pandemic requiring social distancing and forcing employees to work from home meant that the threat landscape was actually going outside, and your surface is expanding. So you had to manage that risk in order to ensure that the environment remains cyber resilient in the face of this pandemic. Luckily, in Saudi Aramco, we have a very strong foundation for a resilient and digital ready infrastructure that enables us to securely avail these services to all our employees without impacting the business. We had to partner with our I.T. organizations to ensure that any service that is available to employees to work from home went through a very rigorous risk assessment processes in order for us to identify the risks and introduce any controls to mitigate it.
Has the pandemic changed your security strategy at all?
Khalid Alharbi: You should always be able to adapt whenever there is something disruptive. Cybersecurity is not a stranger to this, as a strategy process. One of the things that we had to do was to go back and revisit our strategy to see if there is anything that we needed to adjust. We are also focusing on our employees; Education and awareness is a must as they are operating in a different environment right now, they are operating at home.
What are your security priorities looking ahead to the next year?
Khalid Alharbi: Our security priority is probably the security priority of every chief information security officer today, which is basically to enable a secure digital transformation. And this is something where we are currently partnering with the digital transformation office, as well as information technology and the business to ensure that the company adopts a very secure digital transformation in order for us to reap the benefits of the digital transformation without falling in any of the risks… We will continue to focus on improving our detection and response capability to instill cyber resiliency within the organization. That’s something that will always be on our radar.
Where do you see the most potential for growth in the cybersecurity space for oil and gas?
Khalid Alharbi: We are seeing a huge explosion of connectivity and data. And this is going to put a lot of pressure on cyber security organizations to actually go through all of the data, so there is definitely room for growth in automation and orchestration. It’s currently happening, but I think we are going to see an increase in automation and orchestration to give the security analyst space to focus on the items that are important and let the machines run other processes… Technologies such as artificial intelligence and machine learning are going to play a major role in helping organizations detect and respond to attacks… There’s going to be an increase in dependency on artificial intelligence as well as machine learning.
Panel 3: Energy transition: Where does oil and gas fit in?
Where are we heading in terms of the energy transition; what are the key trends and the next steps?
Samar Al Hameedi: The energy transition does raise some existential questions for the oil and gas industry. The biggest challenge we have is how we can manage shifting the strategic landscape while maintaining our commitments to our customers, our shareholders, and our stakeholders in general, but more importantly, how we can find a way to play a leading role in the decarbonization story. We’ve seen a number of major players in the oil and gas industry respond to this with a number of strategies and ambitious commitments to lower emissions and achieve net zero. For IOCs versus NOCs, there are different challenges, different perspectives. When you look at the NOCs, they steward the national hydrocarbon reserves and they contribute significantly to the governments of the nations that they belong to.
Matthew Harwood: We’re seeing a wide range of potential outcomes. And probably in my career of 25 years in the oil and gas industry, this is probably the greatest level of uncertainty about how the energy mix might unfold. We are seeing anything from peak oil being perhaps post-2040 to others saying that we’ve already had peak oil… I think what’s probably true to say is that hydrocarbons will continue to play an important role supporting in petrochemicals and transportation for many years to come. And it’s certainly clear that the oil and gas companies in the Middle East will have a very important role to play as some of the lowest cost production of hydrocarbons globally.
What are the top priorities right now in terms of pushing for lower emissions and increasing focus on sustainability?
Samar Al Hameedi: It’s going to take a lot of [research & development] R&D and innovation and new technologies for us to propel our decarbonization targets forward. To meet our 25% GHG intensity, we’re looking at different levels of technology, energy efficiency, scaling up our CCUS. But it’s a moving target. We need to look at how we can take this one step further, what kind of technologies and solutions do we look out beyond CCUS? It has to make business sense to ADNOC, but as well maintain our position and our commitment to being a responsible oil and gas producer. …Our R&D capabilities and the digital capabilities of the technology group are harmonized with sustainability mandates. So we are looking at capitalizing on the digital infrastructure we built, looking at how we can further optimize our activities and operations.
What are some of the major misunderstandings about the role of oil and gas in the energy transition?
Matthew Harwood: The oil and gas community has a number of capabilities which in some ways are unparalleled globally, and if they’re harnessed as part of the energy transition could be part of the solution. We have the ability to deliver large scale, complex infrastructure projects globally, and very few organizations have that capability. Having that network, that capability, that experience is something that we need to harness in this energy transition. There are two very specific capabilities the oil and gas community has that really don’t exist anywhere else. The first is the ability to operate offshore and deliver projects remotely, like offshore wind projects, harnessing strong wind resources far offshore is an area where I see the oil and gas community having a strong role to play. Secondly, subsurface knowledge. Looking at reservoirs, aquifers, which could be fantastic stores of CO2 in the future. Who understands that as well as the oil and gas companies?
Liv Hovem: The biggest misunderstanding is that there that the oil and gas will not be there in the future, when there will actually be a lot of oil and gas [in the energy mix]. It will be almost half of the energy system, half of the energy sources. So that’s a big misunderstanding. Also, in order to reach the climate goals, we actually have to work on that part of the whole to decarbonize that part of the energy system. And I think the oil and gas industry is really the only one capable of that… I think we need to get our story right, so that we are seen as an attractive and important player in solving this problem.
What is the right role and responsibility for oil and gas in the transition?
Liv Hovem: I think that that many oil and gas companies are doing the right thing, setting very ambitious targets. But of course, now they will be followed very closely to see that they actually deliver on these targets. I guess the biggest challenge is actually the scope three emissions, which is hard; how do they tackle that? But I see now that there are new partnerships evolving. Of course, another part of it is that they are diversifying into renewable energy systems. But it’s also the element of becoming more of an energy provider than an oil and gas producer, which will then give you very new business models in the industry. It will be interesting to follow exactly that, the scope three emission targets, and how that develops going forward.
