Fuels in transition – challenges for the oil and gas sector

Oil and Gas markets are facing a new reality since:

Demand is complicated 

• Request for new fuels and energy products
• Product demand is more important than crude demand
• Price elasticity increase as subsidies are removed

Supply is challenged 

• The shale oil and gas new reality
• Investment financing limitations due to capital shortage
• Supply driven investments are slow to respond

Energy markets are evolving

• It is a consumer - oriented world
• Hedging energy markets is a new price setting mechanism
• Policy and regulations are dominating

Low carbon footprint policies and climate debate

• Environmental regulations imbalance the market
• Create unequal cost burdens

Geopolitical frameworks are rethought

• Pipelines chess game
• Economies in stress forced to structural reforms
• The “energy-water-food” nexus

Policy limitations step up actions

• COP21 meeting: The Paris Agreement (Dec. 2015)
• The EU Action Plan for the Circular Economy (Dec. 2015)
• European Strategy for Low-Emission Mobility (July 2016)

Moving away from fossil fuels? Not so easy, not that quickly!

• Low-cost renewables are required
• Volatility in CO₂ markets
• Infrastructure bottleneck (the chicken – egg dilemma)
• Not enough money for investments
• Technology issues to be resolved

New challenges for energy players

• Balancing the fuel mix
• Reliability of fuel quality
• Knowledge capture
• Technology integration
• Identifying new energy sources
• New business models to capture value

The future of transport is Clean and Sustainable

• Focus on Energy and GHG Reduction
• Electric Vehicles are attractive for some light duty applications but long haul will need low carbon fuels
• Advanced biofuels can be an alternative