Frontier CEO Brief: "Their Success is Our Success"; World Energies Post-Summit Report
I’m delighted to share the release of our World Energies Post-Summit Report, capturing the themes, analysis and actionable insights that emerged from this year’s gathering of global upstream leaders in London.
Over the next few weeks, I’ll be highlighting key takeaways from across the Summit - from the strategic priorities shaping investment decisions to the partnerships redefining upstream collaboration.
Our first spotlight, “Their Success is Our Success,” explores how international and regional cooperation remains the cornerstone of energy security and sustainable growth.
Opening keynote, H. E Karim Badawi, Egypt’s Minister of Petroleum and Mineral Resources immediately focused on a recurring Summit theme – the criticality of collaboration at both international and regional levels. Repeated consistently throughout the Summit, the topics of collaboration, flexibility and transparency permeated the Summit’s opening speech.
The far-reaching and ever-increasing requirement for hydrocarbons cannot be met alone. Engaging with partners and governments – and particularly those in relatively close proximity is key to unlocking full potential. Using Egypt as an example, His Excellency placed emphasis upon the country’s strategic location as an enabler for the delivery of sustainable oil and gas across the Middle East, Europe, North and Sub-Saharan Africa. In turn, establishing Egypt as offering huge investor and partnership potential to the global industry.
Egypt’s focus on creating a robust platform from which to enable monetisation of gas and molecules is designed to have far-reaching benefits…
“This field we’re all involved in - in delivering energy needs for our populations - touches the lives of everyone around us”.
Key takeaways from His Excellency, which reflected subsequent discussions across the Summit include:
Accelerating production from existing fields is the lowest carbon-intensive and most efficient way to answer immediate energy demands. Concurrently, accelerating the pace of exploration to identify future reserves is crucial to provide for increasing energy demand.
A focus on infrastructure development - upstream, midstream, downstream - will always prove critical, particularly in the development of the optimum energy mix and capabilities to export gas, green and value-added derivatives.
The environmental impact remains fundamental. Commitment to the environment must form an integral part of all workflows. This is not an “either, or” landscape – sustainable development of oil & gas and mining are crucial for energy security.
Visibility of opportunities and flexibility – as illustrated by the Egyptian Upstream Gateway – are the foundations of attracting investment.
“Policy, innovation, partnerships”
Strategic Shifts in Global Upstream – Emerging Opportunities and Challenges
Addressing the fundamentals which were to be discussed at length during the Summit, we once again created a unique opportunity to hear from those at the helm of the IOCs and multi-client data providers most active across the globe.
Focusing first on global geopolitics and their impact upon upstream investment, each panellist agreed that investors absolutely have to adapt to the increased complexity of the global landscape. This can be viewed as both a challenge and an opportunity, with one IOC referencing a systematic and conscious approach to recalibrate its portfolio to invest in the countries where it knows it can make a difference.
“The long view is imperative”
IOC investment timeframes are decades long – and this is critical when dealing with current geopolitical contexts which are subjective and frequently based on emotion and feelings. When those collides with value and risk, geopolitical situations compel investors to work to the big picture - understanding conflict timeframes and balancing the driving forces, in order to enable governments to function and ultimately gain security – in which energy security plays a fundamental role.
“Government blueprint for success”
Asked to provide governments with their key piece of advice for attracting investment, our panellists concurred that with the right focus mix of innovation and fiscal flexibility, the fortunes of a nation can change over the course of 20 years, creating transformative value for decades to come.
Additionally, governments should adopt the mindset that mature basins have an important role to play. Flexibility in collaborative approach is the cornerstone, with
Egypt, Indonesia and Angola held up as examples of administrations getting this right in attracting investment.
Our panel was keen to point out that a key ingredient for success is government reflection of current sentiment within their key stakeholder groups. This is about more than resource and policy, it’s about the constituents the government represents.
“Speed is the key”
“Global exploration spending is half of that in 2015, we’re producing far more than we find and reservoirs have never been lower.”
Against this context, the panel agrees the appetite to reinvigorate exploration portfolios appears to be increasing – but requires the aforementioned government collaboration for the material opportunities to be progressed.
Capex still sits at 90% production, 10% exploration – consolidating the panel’s opinion that as the BPD drops and budgets remain tight, fast tracking exploration to production is a strategic priority.
Final words
“It’s simple - we need more oil and gas and finally society has realised that. A positive trend.”
“Don’t be disheartened by society’s opinions. Push back on it – society needs energy security.”
“We can’t undertake exploration without data and continuously improving cutting edge data is critical. We can see things today we couldn’t see five years ago.”
Get a copy of the World Energies Post-Summit Report here.
