Tuesday, 10 November 2015

Uncertain future: Where will today's oil and gas companies go?

If the future is uncertain in the oil and gas industry, where do those companies who have known just this business and nothing else go from here? How do they hedge for the future? Should it be by transiting to holding more ecological friendly fossil fuels like gas instead of oil, or should they look for new business opportunities altogether?
8Where should an ONGC or an IOC or GAIL or a Cairn India be headed from here?
Buying more oil and gas assets not longer makes sense, not until there is more clarity all around.

8All these companies are very badly equipped to handle disruptive change.
8The thinking process is just not right and internal processes do not allow for innovation.
8They would rather take the risk of sinking another few billion dollar in hydrocarbon reserves than spend the same money investing in cutting edge Carbon Capture and Storage technology firms.
8It is unlikely that the ONGC chairman will ever think of putting some of his surplus money in a battery start-up firm -- that promises to come up with a disruptive yet low cost, low weight and quickly chargeable energy storage technology. He will be happier picking up a stake in a remote Siberian gas field where the reserves are high and the acquisition cost is attractive.
8It is equally unthinkable that Oil India will ever pick up a small stake in an electric vehicle manufacturing start-up somewhere in California.
8GAIL would know no better than to invest in one more LNG terminal with the ostensible aim of supplying gas to India even though there is now such a glut of new LNG terminals all over the world that it is impossible for many of them to make money for a long time to come.
8IOC cannot ever think of planning how to use their massive network of retail outlets should they become redundant when battery powered cars become cost competitive within the next 10 years. Should IOC then start a food business in strategic collaboration with chef Gordon Ramsay, or tie up with McDonalds or buy out Haldiram? For all you know the company can make more money converting their COCO outlets in big cities into fine dining restaurants and selling burgers and samosas in thousands of other outlets across the country than it ever did dispensing petrol and diesel.

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