Energy demands: the emerging risks for oil and gas
With many of the older, more mature, oil and gas fields and basins now past peak production, we are moving into a major new phase of investment across the industry, as the challenges of providing more energy to a growing global population intensify.
Consequently, fundamental new trends are emerging across the industry:
- Exploration activity is increasing in new and existing oil and gas geographies.
- New sources of unconventional hydrocarbons are now economically and technically recoverable. Technology is creating new opportunities and pushing the boundaries of what constitutes recoverable reserves ever further.
- Gas is playing an increasing role in the global energy mix. This has led to a dramatic increase in the number of liquefied natural gas (LNG) and gas pipeline projects around the world.
- Emerging markets are seeing significant growth in their energy demand and are consequently seeking energy security and new sources of supply. This, in turn, is leading to significant new infrastructure projects that are linking new sources of supply to new markets.
All of these factors make it an exciting time within the oil and gas industry. However, the pace and scale of change is resulting in significant alterations to the industry’s risk landscape. Heath, safety and the environment, price volatility, exploration risk and supply disruptions have long been the key risk drivers within the industry. While these well-explored risks still remain, in the article we take a look at some of the new risks that are emerging, including IT security, counterparty risk and increasing project scale and complexity.
For example, here is an extract from the article that looks at IT security and “waking up to an invisible threat.”
IT security has entered the top 10 risks for the first time in this year’s survey,* a reflection of the industry’s growing use and reliance on technology to manage all major technical, operational and commercial aspects of the business. This risk has a number of dimensions to it, ranging from operational sabotage and theft of intellectual property rights, to commercial espionage. All of these could have catastrophic operational or commercial consequences for an oil and gas company. Organizations need to be vigilant and to ensure that their IT security approach is leading edge, well maintained and regularly tested. IT security has moved from being the domain and concern of the IT leadership team to being a board-level issue.
As the global pace of change is accelerating, it is critical that as much uncertainty as possible is de-risked, and managed effectively, to ensure the industry can continue to meet the rising energy needs of a growing global population.
Find out more
For further information about the survey referred to in this article, visit ey.com/oilandgas/business-pulse.
* Business Pulse: exploring dual perspectives on the top 10 risks and opportunities in 2013 and beyond, oil and gas report, EY, 2013.
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