ADIPEC Roundtable Whitepaper

EXECUTIVE SUMMARY
For over one hundred years, the oil and gas industry has been at the centre of the world’s energy system,
enabling economic development and human progress. Hydrocarbons have not only provided energy for
power and transportation, they are fundamental building blocks for making a wide-variety of every day items,
including chemicals, plastics, pharmaceuticals, paints and fertilisers. It is estimated that around a quarter of
every barrel of oil goes into non-transport or non-energy uses.
So, for the foreseeable future hydrocarbons will continue to be a key enabler of growth and prosperity, as
economic and political power shifts to the developing economies of the east. The key trends of population
growth, energy poverty eradication and economic growth are positive signs for the industry. But, at the
same time, alternative sources of energy are increasingly challenging the dominance of hydrocarbons,
becoming more available and more affordable, creating a diversified energy mix where, by mid-century
traditional and new forms of energy will be split almost equally between fossil and non-fossil sources.
However, as the demand for energy continues to increase, the need for the oil and gas industry to adapt
and change increases too. As it transitions to the new energy mix, the industry must grapple with a number
of uncertainties surrounding energy policies; volatility of both prices and demand; its impact on national
budgets and employment; the skills shortage and how best to integrate advanced digital technologies to
capture operational efficiencies and maximise productivity, while maintaining cost and capital discipline.
But perhaps the biggest uncertainty for the oil and gas industry lies in the much more pervasive
environmental agenda being pushed forward, which calls for an accelerated transition to a low carbon
economy. There are questions over how quickly decarbonisation can actually happen, what will act as
catalysts to accelerate or decelerate it and crucially who will foot the bill for it?
Consequently, as the pace of this energy transition accelerates and energy demand continues to rise, the oil
and gas industry will come under increasing pressure to demonstrate it can provide secure and sustainable
energy, while playing its part in decarbonising the global energy system to meet climate change mitigation
targets.
• The industry is being challenged to decarbonise, while at the same time it is expected to eradicate
energy poverty and meet increasing global demand for energy.
• Faced with rising energy demand, oil and gas producers need to continue to invest and explore and
develop new fields, but their access to capital is likely to be more constrained by financial institutions
under pressure to decarbonise their assets.
• The extent to which oil and gas remains relevant in the future depends on how the industry responds to
two main issues: methane and carbon dioxide emissions.
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