DEPARTMENT OF SCIENCE & TECHNOLOGY
PHILIPPINE STATISTICS AUTHORITY
2018 BANTOG DATA MEDIA AWARDS CHAMPION
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A broader look at today’s business n
Saturday, October 13, 2018 Vol. 14 No. 2
2018 EJAP JOURNALISM AWARDS
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Under pressure from activist investors and the public, while also worrying about future regulation, Big Oil is beginning to hedge its bets on the future.
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By Clifford Krauss New York Times News Service
HAT is the future of oil? It’s hard if not impossible to say for sure, but there are few more important questions, since the answer will be a key guide to the fate of humanity over the next century.
It’s worth speculating about because the climate will depend on it, with the burning of gasoline and diesel key drivers for global warming. The balance of international power is also in play, with the future fortunes of such foes as Russia and Iran tied to the commodity. Huge fortunes could be made or lost from any shifts in the energy economy, which is currently controlled by some of the largest private and state corporations in the world.
Predicting the energy sources of the future has always been a fool’s game. In the 1950s, nuclear energy was supposed to promise cheap power for all, but is now in eclipse. Biofuels seemed to hold great promise a decade ago, but now are little more than an afterthought. When most experts thought the country’s oil reserves were in decline, shale drilling unleashed a boom in natural gas and oil production that now seems to perpetuate the dependence on fos-
sil fuels except coal. The 2015 Paris climate agreement appeared to be a turning point, when nearly every country committed to slashing its carbon emissions. But there has been some backtracking, especially from the Trump administration, which is withdrawing from the agreement and moving to weaken rules on future auto emissions. A plan by Norway’s $1-trillion sovereign wealth fund to divest of $40 billion in oil stocks is
meeting reluctance from within the government. “The demand for oil continues to grow even as there is an increased focus on controlling emissions and addressing the climate agenda,” said Daniel Yergin, the energy historian and author of The Prize: The Epic Quest for Oil, Money & Power. But he added that he would not discount an eventual change in the direction of energy markets, even while it is “difficult Continued on A2
The energy industry, in the words of its leaders N advance of the Oil & Money Conference held in London this week, co-hosted by The New York Times and Energy Intelligence, The Times asked some of the participants to answer this question: What are the biggest challenges your industry is facing and what is your company doing to address them? Here are their responses, which have been edited and condensed. PESO EXCHANGE RATES n US 54.1710
Andrew Smart, global energy industry manager of Accenture
THE biggest challenge for the oil and gas industry will be navigating short- and long-term disruptions. Companies large and small must make their production businesses even more competitive, while simultaneously creating opportunities for material growth based on future demand. As the global industry recovers from the 2014 downturn—one of the deepest in memory—it is at a crucial inflection point. While decisive leadership and restructuring was needed to survive, few can be confident that they transformed sufficiently to thrive in the cycles ahead. The industry is holding its breath to see where cost savings can be sustained as prices and ac-
ANDREW SMART
HANDOUT VIA THE NEW YORK TIMES
I
By The New York Times
tivity levels rise. At the same time, major companies now understand that the fundamental changes, required to capture the full value of digital technologies, still need to be made. This will require a shift from simple deployment to more wholesale transformation. Crucially, now is the time to address the gradual but relentless disruption that continues to change the balance of supply and demand. Industries we serve— power, transportation and materials manufacture—are being disrupted by new technologies, regulations and customer behaviors. Having spent decades obsessed with finding new sources of supply, we must now enhance the understanding and expertise that’s focused on capturing demand.
There are any number of strategies to navigate these uncertainties. Transforming core operations to maximize investment capacity is crucial, as is setting intelligent strategies for the future. Additionally, companies must ensure that investment capacity is allocated deliberately between these core and new business options. This will require a wise pivot by the oil and gas industry, balancing capital, capability and risk allocation to create options for sustained success. Indeed, oil and gas companies may find themselves spearheading a new petrochemical revolution; competing head-to-head with utilities in efficient, highly distributed power generation; or even creating new ways for consumers to access Continued on A2
n JAPAN 0.4825 n UK 71.4895 n HK 6.9122 n CHINA 7.8236 n SINGAPORE 39.1635 n AUSTRALIA 38.2447 n EU 62.4158 n SAUDI ARABIA 14.4433
Source: BSP (October 11, 2018 )