THE CHALLENGE AHEAD: ENERGY COMPANIES NEED TO STEER THROUGH CYCLES AND TRANSITIONS

Energy companies face tremendous short and long-term challenges. Short term, the challenges are related to volatile energy prices, illustrated by the oil price slide in Q4 2018. Rystad Energy has developed a proprietary model using system dynamics to understand market dynamics. Key insights from these simulations will be shown, e.g. how shale has increased the market volatility and shortened the cycle time.

Longer term, energy companies and governments must prepare for the energy transition away from fossil fuel. It is not IF, but WHEN this will happen, as oil demand will peak and renewable electricity generation will become very competitive. Investments in new energy sources have a very different risk-reward profile versus traditional upstream investments and capital cost will need to be much lower, very different from the current equity-based funding of capacity development. Thus, are current energy companies natural owners of tomorrow’s energy infrastructure? How fast will the transition happen and what kind of financial and organizational transformation do we need to see? And which role should, and could governments take? How does this impact E$amp;P companies around the world?