OE is being hosted for the first time in the city’s recently completed £333 million The Event Complex Aberdeen conference and concert venue at Dyce, a valuable addition to the infrastructure of Europe’s oil capital.
The building has been designed using the latest tech with an emphasis on sustainable investment and a lower carbon footprint, signalling that the city in transition following the global oil price downturn. Those themes – smart technology, sustainability, lower carbon, optimism and transition – this week populated the OE agenda.
It is evident that the oil and gas sector is undergoing fundamental change and while happily it is emerging from the downturn with many positive lessons learned, this new post-downturn landscape is markedly different. Heightened attention and tension regarding environmental concerns, super power trade wars and resultant swings in currency trading, aggressive naval interventions in the strategically important Strait of Hormuz, and a potential no-deal Brexit, are some of the main elements which can cause potential disruption to security of energy supply.
My view is that the industry, rather than shrinking away from those varied and complex obstacles, should almost relish the challenges. The oil and gas sector has historically been incredibly inventive and creative and it is those character strengths which must come to the fore if the sector is to reach its full potential under 21st century terms of scrutiny and engagement.
The sector has a habit of reinventing itself to navigate a myriad of economic and geopolitical woes. However, it must also engage increasingly with people and representative bodies who are not steeped in the industry and its ways, to ensure it remains abreast of all perspectives and to be in a position where it can be seen as an important long-term contributor to economic, environmental and political stability. The industry must state its case as part of the solution rather than the problem.
As the industry enters a new normal, it requires an influx of youth - the apprentices and graduates who are tomorrow’s leaders – to introduce a wave of fresh ideas and modern thinking. This new generation will expect and demand genuine diversity, and my feeling is that OE delegates fully understand the industry must adopt the broadest interpretation of inclusion if it is to remain relevant and attractive.
OE is also an opportunity to measure, discuss and analyse trends in the basin. Recently we have experienced a lively mergers and acquisitions market with ExxonMobil announcing it will sell up to £1.6 billion of oil and gas assets, while other deals include Chrysaor’s buying ConocoPhillips assets valued at close to £2.7bn and Chevron’s sale of almost £1.6bn of assets to Ithaca Energy.
Headlines which describe major operators “retreating” from the North Sea are dramatic but unhelpful and in reality it is generally a case of the longer established players focusing on their portfolio spread and determining on a global and regional basis where future investment is to be made. This naturally allows opportunities for new entrants to the UKCS, while existing players can selectively extend their portfolios, which is in itself is a healthy state of affairs.
UK production rates are increasing and in the wider North Sea the Norwegian oil and gas sector is enjoying an uptick. The signs are positive and there is much to celebrate but the industry must continue to look at efficiencies and commercial and technical innovation if it is to refresh, regenerate and revitalise. That message applies equally to all the energy sources as we strive to balance global demand and the imperative of carbon reduction.
- Bob Ruddiman, global head of oil and gas at Pinsent Masons