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The oil downstream - vertically challenged - overview - EY - Global

The oil downstream: vertically challenged?

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The old model is not likely to be jettisoned but rather adapted, as companies look for more creative ways to unlock value.

Market fundamentals and changing downstream dynamics are challenging the current integrated operating model.

Quite simply, economies of scale and access to technology and capital haven’t been enough to maintain the prominence of the integrated operating model. Recent challenges to the integrated models have come from both investors and from the structure of the downstream itself.

Take a closer look at our report.

The old model is not likely to be jettisoned but rather adapted, as companies look for more creative ways to unlock value.

Thus, we can outline a “new” yet “old” case for integration, based on the following:

  • Competition — a broader array of competencies and operational strengths
  • Innovation — technological leadership and access to larger R&D resource capabilities — key for alternative and unconventional energy development and monetizing opportunities
  • Control — the ability to develop the entire value chain enables a level of control that helps in delivering economic returns
  • Capital — particularly given the risks in upstream (unconventional, frontier, leading-edge technologies), access to capital is crucial

Contact one of our oil and gas professionals today to learn more about how we can help you adapt.



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