The Downstream Roundtable was led by Thought Leader Partner A.T. Kearney
Dr Sultan Ahmed Al Jaber the CEO of ADNOC set out a vision for the oil and gas industry, Oil and Gas 4.0 at ADIPEC 2018. A vision both recognising the need for transformation and encouraging players across all sectors of the industry to take action now to ensure the industry’s relevance remains robust in the overall energy system.
With this challenge in mind A.T. Kearney, as Strategic Roundtable partner to ADIPEC, hosted the downstream roundtable discussion with leaders from NOCs, IOCs, trading companies and independent energy players. Jose Alberich, partner A.T. Kearney, set out a comprehensive overview of the key trends in both refining and chemicals. Trends that will need to be absorbed and managed if organisations are to ensure their place in what is becoming an exciting growth sector of the industry.
And whilst there was debate, discussion and some different views on aspects of the industry, one theme that saw no disagreement amongst participants was indeed that of growth. Growth in both refined products (gasoline, gasoil and kerosene) as well as in petrochemicals. Growth associated with the emergence of new demand markets both large and small. It is this real and forecasted growth that is acting as a stimulus for the downstream sector to think differently about how it accesses this potential. However, for this growth to be harnessed participants agreed a pivot to the new would be required to address some of the challenges inherent in the industry:
- In the context of rapid evolution of the business model. One that is capable of accessing upstream to secure feedstock input and leveraging technology to ensure greater conversion capability and flexibility, resulting in a more diverse product slate.
- In ensuring material access to new markets like India, China and Mexico. Where population growth and demographics are favourable to supporting growth in downstream products.
- In developing capabilities and leveraging digital technologies that allow downstream to be aligned with the customer and capable of tweaking demand when preferences evolve.
- In embracing a more dynamic trading capability more aligned with the large Trading companies.
- In the breadth and depth of partnerships required to deliver, upstream access, new technology and access to markets.
- In the ongoing and relentless focus on a cost base to ensure products remain competitive in markets with different regulatory environments.
As optimistic and exciting as this agenda is, leaders recognised it would not be without its challenges. The tilt to the new is likely to result, over the next 10 years, in a refining capacity shift and overbuild. With the consequent oversupply of some products leading to pricing pressure. Organisations will have to remain alert to this possibility and ensure a flexible and agile operating model is in place, capable of switching to new markets to compensate (with a more active role in the trading flows of refined products or with more intense integration to chemicals) for these supply / demand imbalances.
The talent agenda is one that concerns senior leaders. The evolution of downstream requires new capabilities often in new markets. Leaders aligned on the importance for the industry continuing its work with education centres and policy makers encouraging new talent to consider careers in our industry. This was called an organic approach to talent management, covering both education and expertise. In addition, leaders discussed the emerging in-organic route to access and retain talent through the new partnerships forged in recent years. It will take nearly six years to teach an employee to be business fluent in Mandarin. Too long to be relevant in a business cycle. But a new partnership can give you access to this need in months not years.
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