The oil and gas industry (O&G) favours the reputation of being one of the largest and most important industries in the world. As we leave 2019 behind us, it's time for data analysts to try and predict the trends that will affect the industry in 2020.
Even though 2020 is well underway, predicting trends is still in the process. The importance of these trends results in shifts in prices, as well as shifts in the entire global market. That's why it's of vital importance to keep an eye on these emerging trends. With that in mind, here are a few O&G trends that will shape the industry in 2020.
Increased demand for natural gas
Natural gas demand is expected to increase in 2020. The main reason is that natural gas is supposed to replace coal and gas power. As global warming continues to escalate, the O&G industry is looking for a way to reduce the impact on the environment as much as possible.
LNG (Liquefied Natural Gas) investments will continue to occur across various geographical locations across the world. However, the U.S. still has a role to play in the international trade of LNG through prices and volume. In fact, the U.S. has an excessive supply of natural gas that will make this country very competitive in the global market.
Adoption of new technologies
When mentioning trends that will affect any industry, one cannot ignore the impact modern technology has. Over the years, the O&G industry has been adopting new technologies that will improve the entire industry's efficiency and performance. That said, this trend will continue on in 2020.
A good example is the emergence of the entire branch of e-commerce trade specifically designed for essential oilfield equipment. Nowadays, vital components and inventory, as well as replacement parts can be procured online.
Moreover, new technologies, such as artificial intelligence (AI) and automation are also starting to affect the O&G industry. New solutions and new approaches are, indeed, made possible thanks to these new technologies.
O&G prices are set to remain range-bound
One of the trends that everyone is focused on is the price of oil and gas in the global market. Fortunately for everyone, the prices of these resources are expected to remain range-bound in 2020.
The main reason is that non-OPEC (Organization of the Petroleum Exporting Countries) nations that aren't the part of OPEC+ program deal, such as Australia, the U.S., Norway and Brazil are increasing production. This will keep the prices of oil and gas resources in check. Furthermore, the global demand for oil will also ensure a stable foothold for the prices.
A smaller impact on oil prices
Due to the fact that non-OPEC members are increasing production and growing their supplies, the unexpected and short-term outages in oil are expected to have a smaller impact on oil prices.
Scenarios, such as prices of oil skyrocketing for a day reaching $62.90 per barrel due to the attacks on Saudi Arabia's vital infrastructure are less likely to be as impactful. The potential outcomes of such cases aren't nearly as disastrous for the global oil price today as they were five or even ten years ago.
A turn towards social responsibility
Another trend that's shaping the O&G industry is social responsibility. As mentioned before, the concerns of the environmental impact of exploiting natural resources, as well as the growing concerns regarding global warming are affecting the O&G industry in more ways than one. These concerns are encouraging O&G companies to take a turn towards becoming more socially responsible.
Moreover, O&G companies are, therefore, becoming more transparent. This includes voluntary disclosure of information about sustainability and efficiency of such companies, as well as providing the community with reports regarding governance, economic, social and environmental performance. In addition, major O&G companies are investing in new technologies that will reduce the carbon footprint and environmental impact of natural resource exploitation.
The O&G industry continues to evolve each year. With new technologies and market trends on the rise, it's difficult to predict in which direction the global market will turn. That's why it's important for O&G companies to keep an eye on the trends so that they can remain competitive and relevant in the global market.