Oil and Gas Reality Check 2013
A look at the top issues facing the oil and gas sector
The Deloitte Touche Tohmatsu Limited Global Energy & Resources group focused its list of top trends on the economic uncertainty and its impact on capital availability for the report of this year. This year's Oil and Gas Reality Check marks a different approach. Rather than simply identifying the issues that are of interest to the sector, we have focused on the five primary challenges and attempted to predict a direction which these trends will follow. We assessed the industry fundamentals of each trend – the supply, demand, macroeconomic, regulatory, cost, price, and competitive behavior factors – allowing us to draw insights and describe what may unfold over the short and the long-term.
The top five trends:
- Shale gas – a global or regional resource?
- LNG pricing – the end of oil indexation?
- Resource nationalism – entering a period of low tide?
- NOCs – capturing the playing field
- Managing market complexity – revolution of the play, evolution of the player.
The discoveries of new resources across various geographies coupled with the technical challenges of developing those resources are softening governments' contract terms, fiscal takes, and other policies; all indicators of the degree of resource nationalism. As production efficiency rates and capabilities improve, will resource nationalism, in terms of government policy, surge or will it pale in comparison to the competitive rise of NOCs? How companies react to and deal with this uncertainty is changing the notion of a singular business model and giving rise to different business models.