It’s not every day that industry executives see eye to eye. But for oil and gas companies, 9 out of 10 agree on one thing: it’s time for change.
As the energy transition gains momentum and the energy system expands, oil and gas players are having to manage disruption on multiple fronts. Their competitive edge depends on how well they adapt to changes in supply and demand. How well they respond to stakeholder pressure for low-carbon solutions. How well they accommodate new technologies. And how deftly they pursue new value pools that are moving away from the well head and ever closer to the customer. In all these ways, the industry finds itself in a perpetual and exhausting scramble for relevance.
Against this backdrop, it is really no surprise that the idea of reimagining the energy system comes up repeatedly in my conversations with clients. They’re not outliers. A recent Accenture survey found that 90% of industry players recognize the need to change their businesses in the next three years.
of the energy industry recognizes the need for rapid change in the next three years.
In my discussions with industry leaders about the changes that are needed, I find the juxtaposition between competition and collaboration particularly interesting. For so long, companies have competed against each other. But to thrive through the energy transition, forthcoming regulatory changes, and green energy adoption, old rivalries must give way to new ecosystem partnerships. In the new energy future, collaboration will dictate competitive advantage.
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Necessity is the mother of (re)invention
Accenture research into how oil and gas companies can thrive through the energy transition.
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Let’s look at the value of ecosystems in times of change and how to collaborate effectively in a way that will help prepare the industry for what lies ahead.
Ecosystem convergence to manage and thrive through the energy transition
The energy landscape is newly diverse from both a supply and demand perspective. To manage this diversity well, the energy industry is starting to think about strategically combining the right partners and strengths across the value chain and forming ecosystems of varying sectors, competitors and even customers. This is encouraging. As Accenture pointed out in Decarbonizing Energy: From A to Zero, reinventing the fossil fuel-based energy system will depend on such cross-sector collaboration.
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Decarbonizing Energy: From A to Zero
A practical guide to achieve net-zero emissions.
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From mobility, to power and low-carbon products, the industry is starting to form the ecosystems that will usher in the energy future. At the time of writing this post, I know of eight energy consortia already. (If you haven’t yet joined, it’s time to move fast!)
Consider the approach of VAKT, the ecosystem re-imagining commodity post-trade processing with blockchain. With the goal of making the market more efficient by bringing together all stakeholders in a well-designed multiparty system, VAKT started with three of the supermajors, three commodity trading companies and three banks. Why? Because it knew if it wanted to truly re-imagine post-trade settlement for crude oil, all of them needed a seat at the table.
As the VAKT case makes clear, it’s important to meet the right partners to realize the desired transformation. When forming a minimally viable ecosystem, companies need to choose their partners wisely. They need to ask what ecosystem collaboration will enable them to do that they can’t do on their own.
In many cases, the value of partnerships lies in allowing companies to lower capital investment and own a lighter asset footprint—all while accelerating customer-centric innovation. This is critically important, given that we estimate the energy industry will need to invest $100 trillion over 20 years in infrastructure, solutions and services to ensure availability and sustainability of energy. In other cases, collaboration is about creating an environment in which ecosystem partners can co-innovate new products and services or create new collaborative business models to better serve customers.
But there are challenges to ecosystem adoption.
While the energy industry is starting to embrace the opportunities that ecosystem collaboration enables, oil and gas companies face certain challenges when it comes to adoption and speed to market. Here are three that I hear about often, along with ideas for overcoming them:
1. Getting buy-in from stakeholders to create new ways of working
Parties join a consortium with differing objectives and/or agendas, which makes it hard to craft a common mission. Coming to consensus on a shared vision is a phased process that entails both network expansion and product development. Both the business and technical sides of the participating organizations must work together to identify value pools across the ecosystem.
To start, examine your existing processes and reimagine them with the use of a shared data construct. What is a use case you can select that everyone will benefit from? Consider post-trade settlement for commodity trading, joint venture accounting, emission tracking, etc.
2. Sharing data
Collaborating in new ways requires technology reinvention and innovative approaches to data governance. Partners need to dynamically share data about all sorts of things—from assets to usage to markets—transparently and securely from various sources in real-time. Implementing blockchain and multiparty systems can make information and transactions verifiable and transparent to multiple parties simultaneously.
On a related note, collaborative business models—and the collaborative technologies that enable them—require their own trust mechanisms. The ecosystem must decide its governance structure and define what data can be shared with whom, when and for what purpose. This is important to help participants move from a mindset of competing to collaborating and, ultimately, to transforming common processes that will help them achieve a shared vision.
3. Developing the new commercial model
The energy industry is very siloed across the value chain and within each company because their customer requirements and demands are completely different (i.e., upstream, midstream and downstream, as well as IT and business operations within each organization or business segment).
Ecosystem data sharing, when enabled by blockchain and multiparty systems, allows a new level of efficiency in the business, thereby reducing reconciliation, providing greater data transparency, and syncing data across key parties in a process. Then the ecosystem can create new insights and hyper-personalized services for all players.
Your next steps will define the new era
We’re at a precipice, and the future depends on getting ecosystems right. Working together for the good of the ecosystem while supporting each company’s goals can be facilitated (and accelerated) through a structured ecosystem engagement approach. The industry is headed in the right direction. As long as consortiums keep a laser focus on value for all parties, effective governance, and what it will take to scale (i.e., standards, interoperability, and growing the network of participants), it’ll thrive through the energy transition.
The right plays will unearth a torrent of untapped value beyond “just” making money. I encourage you to Make the Leap, Take the Lead as the industry transforms from the biggest polluting industry to the biggest supplier of sustainable and clean energy. That is the ultimate prize.
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