The oil downstream: vertically challenged?
Our perspectives on the future of integration
We see rising pressure from sustainable energy demand growth in the developing world but not in the advanced countries. This may cause a geographic shift in demand.
The risk profile of the oil and gas sector is on an upward trajectory, both from an upstream and downstream perspective.
As a result of these industry trends and developments, we see continuing pressures on the sector's existing integrated model, with those pressures arising from:
- Sustained and sustainable energy demand growth in the developing world; thus, a geographic shift in demand
- Volatile and higher prices; increasing consumer sensitivity to higher prices
- Implicit or explicit retail price controls in many developing countries, spurring demand growth
- Tighter product specifications and mandated fuel efficiencies, reducing demand growth
- Rising maintenance and environmental costs; potentially high carbon constraint and/or avoidance costs
- Rising power of the NOCs, resulting in a need for new IOC/NOC partnership models and, notably, a need to recognize some NOCs as new international, integrated companies
- Aggressive NOC capacity expansion and slow IOC closure of marginal capacity.
- Advantaged new refining capacity.
- Growing supply of non-refinery-based liquid fuels, some mandated or incentivized.
- Heightened risk profiles, both upstream and downstream.
Contact one of our oil and gas professionals today to learn more about how we can help you.
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