Energy 2020 Vision: Oil &
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ENERGY 2020 VISION: OIL & GAS 1 CONTENTS EXECUTIVE SUMMARY............................................................. 3 GULF COUNTRIES DIVERSIFY WITH WIND AND SOLAR .. 5 ATTACK AGAINST THE GRID: A DRESS REHEARSAL FOR WHAT’S TO COME? .................. 6 LNG & SOLAR: THE PAIR THAT COULD FLIP THE SWITCH IN AFRICA .......................................................... 7 INVESTING IN TECH TO KEEP THE LIGHTS ON ..................8 DEMOCRATISATION OF DATA ............................................... 9 THE NEAR FUTURE OF OIL & GAS IN CANADA ................ 10 2 EXECUTIVE SUMMARY The oil price collapse in late 2014 technological transformation, and SUMMARIZING BDO’S 4. INVESTMENT IN TECH: signified a fundamental change diversify its portfolio to include GLOBAL ENERGY 2020 While overall spending on R&D in the energy marketplace. While alternative energy sources. VISION FOR OIL & GAS: may decline, most of the spending prices have rebounded from the that does occur will go towards Reflecting on this period of turmoil 1. OIL PRICES: low of $26 per barrel in 2016, the technologies that enhance and transition, BDO’s Global By 2020, low oil prices—expected to supply and demand dynamics that exploration and production (E&P) Natural Resources team is looking remain at or below the $60 per barrel led to the downturn—a supply efficiencies. towards the future to help oil & gas mark—will spur Gulf Cooperation glut due in large part to U.S. shale companies anticipate and plan for Council countries to diversify their 5. DATA DEMOCRATISATION: and stagnating growth in global the challenges and opportunities energy mix within the power sector By 2020, the average E&P company demand—are here to stay. Efforts ahead. We believe that to prepare using auctions to subsidize renewable will make use of 10 percent of its big to rebalance the markets have for success in 2020 and beyond, energy projects. data—up significantly from today, helped inventory levels recover, oil & gas companies must strive but nowhere near full potential. but those efforts are contingent 2. CYBERSECURITY: to become “Lean, Green, Digital” CHARLES DEWHURST on key producers limiting output. By 2020, at least five countries will machines. Gone are the days when success was see foreign hackers take all or part t: + 1 713-548-0855 Agree or disagree with our linked almost exclusively to high The global predictions presented in of their national energy grid offline e: [email protected] predictions? We want to know — production volumes and growing this report are based on research and through Permanent Denial of Service reach out to us here. reserves. collective input from BDO’s Natural attacks. Ready or not, the Resources leaders around the world. CHARLES DEWHURST It’s the confluence of trends—not 3. GLOBAL ENERGY TRADE: In addition, the practice leaders from Global Natural Resources global oil & gas industry just the new pricing paradigm, By 2020, the growth of LNG imports five countries (Australia, Canada, the Industry Practice Leader must contend with an but rapid growth in renewables and solar power will bring electricity United States, the United Kingdom, +1713-548-0855 along with accelerating technology to four in five African people. ever-changing ‘normal’. and the Kingdom of Saudi Arabia) [email protected] advancements—that is reshaping have provided regional predictions the industry. The energy company for the industry in their markets. of the future is one that has successfully figured out how to cut costs, enhance operational efficiencies through digital and 3 BDO’S ENERGY 2020 VISION: THE NEAR FUTURE OF OIL & GAS GLOBAL PREDICTIONS 4 GULF COUNTRIES DIVERSIFY WITH WIND AND SOLAR PREDICTION 1 OIL PRICES BY 2020, LOW OIL PRICES— The pressure is on for GCC sources in the area. Countries Although GCC countries have set EXPECTED TO REMAIN AT OR countries—Saudi Arabia, Kuwait, the are starting to make renewables targets for deployment of renewables BELOW THE $60 PER BARREL United Arab Emirates, Qatar, Bahrain, realistic through auction-based at the national or local level, the MARK—WILL SPUR GULF and Oman—to diversify away from approaches to subsidies. Through region has seen little deployment. COOPERATION COUNCIL oil, especially when it comes to auctions, countries set a target By 2020, we predict that relatively electricity production. level of investment in renewables low oil prices will spur GCC countries (GCC) COUNTRIES TO and allocate contracts to the to diversify their energy mix within The rising domestic demand for DIVERSIFY THEIR ENERGY most cost-effective bidders. the power sector. As utility-scale oil, especially in the power sector, MIX WITHIN THE POWER Almost 50 countries have adopted installed solar and wind costs is hindering the GCC countries’ SECTOR, USING AUCTIONS this approach, and almost 30 continue to decline, they will use ability to export oil and causing their TO SUBSIDISE RENEWABLE additional countries are considering renewable energy auctions to begin economies to contract. In October ENERGY PROJECTS. following suit. reaching their deployment targets. 2017, the International Monetary Fund (IMF) cut the 2018 GDP forecasts for the GCC states from 2.5 percent to 2.2 percent. Non-oil related economic growth is expected to reach 2.4 percent in 2018—well below the 6.7 percent average seen from 2000-2015. Oil-exporting countries across the broader region $60 saw their fiscal deficits skyrocket from 1.1 percent of GDP in 2014 to 10.6 percent of GDP last year. GCC countries’ current trajectory is unsustainable. Most have already begun importing LNG because of the shortage in cheap natural gas, further underlining the need for efficient, non-hydrocarbon energy 5 ATTACK AGAINST THE GRID: A DRESS REHEARSAL FOR WHAT’S TO COME? PREDICTION 2 CYBERSECURITY BY 2020, AT LEAST FIVE The advances in technology that Any disruption to a country’s electric WE PREDICT THAT COUNTRIES WILL SEE allow the energy industry to create grid would have serious implications TODAY’S ATTACKS ON FOREIGN HACKERS TAKE new efficiencies and innovations at for virtually all industries, especially THE GRID ARE A DRESS ALL OR PART OF THEIR the same time require connectivity critical ones like healthcare, REHEARSAL FOR A MUCH NATIONAL ENERGY that leaves power grids around transportation, security, and financial MORE MALICIOUS TYPE the world more vulnerable to services. Since 2011, a dedicated GRID OFFLINE THROUGH OF ATTACK: PDOS. BY cyberattacks. and sophisticated group of cyber PERMANENT DENIAL OF attackers known as Dragonfly has 2020, AT LEAST FIVE Several electric grids around the SERVICE (PDOS) ATTACKS. been targeting the energy sector COUNTRIES WILL SEE world have already come under in Europe and North America. The FOREIGN HACKERS TAKE threat in recent years, most through group has used Trojanised software, ALL OR PART OF THEIR Distributed Denial of Service (DDoS) spear phishing emails and watering ENERGY GRID OFFLINE attacks. In 2015, an attack on a grid hole websites to gather intelligence WITH THE INTENT TO in the Ukraine temporarily cut power with the potential for sabotage. to more than 200,000 people. A DESTROY IT. subsequent attack occurred just a While the number of total DDoS year later, reportedly carried out by attacks decreased by 18 percent Russian actors. In May 2017, officials year-over-year in Q2 2017, there was from the Baltic states—which a 19 percent increase in the average are connected to Russia’s power number of attacks per target. This network but plan to move to the could indicate that the quantity European Union’s grids—said their of DDoS attacks may be waning, power grids were targeted by Russia but the severity of each attack through a series of DDoS attacks. is increasing. “On a daily basis there are DDoS attacks designed to probe network architecture, so it could well be possible that something (serious) could take place later on,” a NATO official told Reuters. 6 LNG & SOLAR: THE PAIR THAT COULD FLIP THE SWITCH IN AFRICA PREDICTION 3 GLOBAL ENERGY TRADE BY 2020, THE GROWTH Africa represents 16 percent of Electricity in Africa has remained Renewable energy has begun to help OF LNG IMPORTS AND the world’s population but just 32 expensive—a particularly difficult more Africans turn and keep the SOLAR POWER WILL BRING percent, or 1.5 in 5 African people, barrier for its population. However, lights on, and LNG exporters—and ELECTRICITY TO 4 IN 5 have access to electricity. The growth as noted by the Africa Energy their investors—will follow this AFRICAN PEOPLE. of liquefied natural gas (LNG) could Outlook, “huge renewable resources initial track. By 2020, we predict change that. remain untapped,” with further that the growth of LNG imports and potential from excellent solar solar power within Africa will bring While many governments in Africa, capabilities across all of Africa. electricity to four in five people on especially in sub-Saharan Africa, Foreign solar companies have taken the continent. have intensified efforts to invest notice and have installed solar in domestic energy production, microgrids or home-based solar inadequate energy infrastructure systems across sub-Saharan Africa. has stood in their way. Two out of At the same time, African countries every three dollars invested into the have begun building import facilities sub-Saharan energy sector since for LNG, including a facility in 2000 have been used to develop Ghana—the first import facility in the energy to be exported rather than for sub-Saharan market. The continued local consumption. growth