Arthur Hanna is the Accenture Strategy lead for Energy. He is a Global Agenda Council member of the World Economic Forum and leads the Forum’s oil and gas industry research programme. Prior to joining Accenture in 1990 Arthur had 10 years of international management experience with BP Oil International. Arthur is a sought after media and industry commentator on topics of energy transition.
1. What is the role of the oil and gas industry in improving energy access in Asia’s developing economies?
The industry plays a part in improving access to reserves, working with regulators to establish markets and pricing mechanisms to allow efficient movement of energy within the region, and investing in talent locally to ensure a flow of capability necessary to address challenges as yet unknown but guaranteed to be faced over the next ten years.
2. How has the current price environment for oil and gas impacted the financing and commercial viability of energy projects?
There has certainly been a major impact on financing in 2015. Simply put, the low pricing environment has and will act as a brake on financing exploration and financing needed to enhance production on existing fields. The impact on commercial viability is lesser as the time horizon for the industry is twenty to thirty years. So while pricing below US$50 will challenge commercial viability today, it will not over the longer term investment horizons of the industry.
3. What then are some imperatives oil and gas producers should consider for long term growth?
Oil and gas producers should manage their business to reflect volatility. They need agile operating systems. They need to be part of the regulatory debate with regulators and policy makers – at the moment, the mindset is still too “us and them”. Oil and gas producers should also be ready for industry consolidation, embrace the mantra of operational excellence, and manage capital as if it resided within their bank accounts!
4. How can digital technologies help companies disrupt existing markets and penetrate new ones during this time of transition?
Digital technologies will disrupt the energy value chain from exploration through to energy consumption. Not only will new markets be created around how energy is consumed and break the hegemony of national grid systems, digital technologies will also create new industrial eco-systems competing in the exploration, production and distribution of energy.
5. What do you think are the major challenges to Asia’s energy security and how can the region bolster its resilience to these?
Asia’s energy security will be tested against multiple dimensions, including: diversity of energy sources, both type (e.g. coal versus gas) and source (domestic versus imports); Infrastructure resilience to major climatic events; and affordability and market mechanisms (pricing mechanisms versus subsidy).
However, the region can meet these challenges and defend itself against disruption through policy and regulation that encourage: diversification of energy sources; investment in modular energy infrastructure; as well as market mechanisms and deployment of government funding to accelerate the progress of energy diversification and energy infrastructure investment efforts.