Takeaways from a Low Oil Price Environment

Posted by admin on March 29, 2015  |   Comments Off on Takeaways from a Low Oil Price Environment

Having recently worked in both the Upstream and Downstream of two of the largest IOCs, there are a few takeaways from the low oil price environment to note.

Nothing has really changed from a business requirements perspective – but those firms who have thus far been lax in their discipline and operational & organizational efficiency will be punished most.  It will become ever clearer which firms were effectively managed and which were not.

Related to the above, capital projects efficiency and related development costs will come under the microscope like never before, highlighting differences in approaches used by various IOCs.  Some will need to change approach quickly to be competitive and for the more traditional IOCs this will not be easy for several reasons.

Downstream opportunities will present themselves as IOCs/NOCs drive to diversify portfolios across the value chain and benefit from higher short/medium term margins.

With that, and the related Upstream shake out, we can look forward to increased M&A activity over the coming year as well as many changes to the make up of the senior leadership teams.