The global oil and gas industry stood by as the year 2016 began on a sombre mood. Dark clouds hovered above the energy sector as crude oil prices continued to nosedive freely. Predicting the Brent crude movement became anybody’s game as prices hitting new lows became headlines each day – dropping to a worrying depth of $24 a barrel on a sunny day in February.
But amidst this hue and cry over the free fall of crude prices, it was as if a silent revolution had started – that of the industry coming to terms with the ‘new normal’. The region began giving up its addiction to artificially high oil prices of around $100 a barrel. A journey towards a future of sustainable energy consumption commenced, as governments in the GCC set out on a path laid by the UAE in removing cushiony fuel subsidies.
More importantly, Gulf leaderships announced a slew of rational measures aimed at transforming their economies through diversification and to wean off dependence on fossil fuel revenues. Although oil prices eventually recovered to above $40 as the year wore on – at one point even breaching the $50 mark, thanks to a concerted effort by OPEC and Russia to agree to freeze output late in September – the regional industry had made considerable adjustments by then.
Commotion over below par oil prices and its harsh impact began settling down as the upstream industry showed clear signs of evolving from a crude price-dictated sector to a segment driven by technology. Observers hiding in caves came out to welcome this transformation, saying the $100 oil prices previously had choked necessary innovation in the industry.
Significant techniques and methodologies, the likes of digitalisation, enhanced oil recovery and automation gained momentum, as the industry started striving towards ‘doing more with less’.
As a sign of maturity, the industry this year has resisted capital markets-style vulnerability to global events, as witnessed by the Brent crude benchmark hardly reacting to the two major political/economic episodes of 2016: Brexit and the election of Donald Trump as the next American president.
The Oil & Gas Awards and ADIPEC this year perhaps present true testimonials of the energy industry’s resilience in the face of low crude oil prices and does bear good tidings that the sector is now surely charting a course of transformation.
All’s well that ends well!
