The energy industry will need to forge new strategies to overcome significant challenges ahead, according to a new report released by Oliver Wyman. The international management consultancy firm has launched its second annual Energy Journal, which defines the latest thinking around macro-trends and micro-developments.
“Change has become the new constant in the energy industry, with continuing pressure from record low oil prices, an excess of supply and not enough global demand,” said Francois Austin, Head of Oliver Wyman’s Energy Practice. “Unprecedented shifts are forcing oil and gas companies, utilities, governments, investors, regulators and even consumers to rethink basic assumptions that have guided the energy sector for decades worldwide. To stay ahead of the profound transformation under way, business and government leaders must forge new strategies, operating models and risk mitigation tactics.”
The predictions for 2016 are around oil prices, demand/supply and energy M&A trends, and on that point Austin notes: “Deal-making in the oil and gas industry has been subdued as highly volatile oil prices have led potential buyers to sit on their hands. Though low oil prices typically produce more M&A, potential buyers may decide to wait for greater stability that may better align buyers and sellers on asset valuations.”