You are here

What is so contradictory about digitalising the oil and gas industry

11th January 2019

Dmitry Lukovkin, AI Business Development Director of Zyfra Group commented on the oil and gas industry digitalising.

Digitalisation is inevitable for O&G companies to be competitive and challenging for the market structure as well as human factor.

The primary motivation for investment in digital is to improve efficiency. According to Gartner, the “smart oil deposit” concept  development could help oil companies to cut cost by 5% and to enhance production volume by 2%. CERA, accounts “smart oil and gas deposit” to cut production cost by 1–6%, while shrinking oil-well downtime by – 1–4% and to lower labor intensity up to 25%. Here speaking about implementation of current technologies, whereas looking into a nextgen technologies numbers could change even more significantly. So the obvious dilemma is between economic benefits and social responsibilities. But there are more buts.

According to the EY report, robotic process automation (RPA) and advanced analytics are expected to have the most significant impact on the industry over the next five years. While 70% company executives say they plan to adopt IIoT in the next 18 months, 20% of respondents believe it carries the most risk in light of the associated cybersecurity threat. BDO Australia forecasts hackers will initiate at least five global cyberattacks on PDO with constant damage to production facilities by 2020. The more digitally complex and interconnected modern systems become the more vulnerable they get.

The third issue is more of a trend rather than dilemma. On average, respondents allocate nearly half (48%) of their digital technology investment to outsourcing, while just 17% of their digital technology investment to building in-house capabilities. While outsourcing can be beneficial at the outset, ultimately, the winners are believed to build integrated, in-house capabilities that embrace the transformative potential of new technologies. Of cource, only majors can afford it and it seems that a winner with the in-house solution will turn it into an integrated platform, that will absorbe younger independent developers.