The oil and gas sector is looking to cyber technology solutions for better protection and efficiency. Compounding the situation are the recent extreme price fluctuations. While these technology decisions are with good intentions, many industry executives fail to fully comprehend the vulnerabilities of cyber targeting against oil and gas.
Global oil and gas executives are preparing to accelerate investment in digital technologies, primarily with an objective of doubling down on their cost-saving motivations, as the oil and gas market volatility of 2018 spills over into 2019. The third quarter of last year saw Brent oil futures touch levels as high as $85 per barrel. But the very next quarter ensured the year ended on a bearish note as the global proxy benchmark plummeted below $55 at one point, before mounting a January 2019 recovery.
The oil and gas sector is totally focused on efficiency saving, underpinned by digital drives, according to a survey conducted by Ernst and Young (EY).[1] Their poll of 100 senior oil and gas executives saw 42 percent of respondents citing efficiency as the main investment driver in the current price environment. Almost 90 percent of those surveyed said their investment in digital will increase over the next two years. Around three-fourths said their companies had already started implementing robotic process automation (RPA), and 87 percent indicated that they are using advanced analytics as they look to use data to increase productivity. While over half said their digital drive was focused on operational improvement. A smaller segment of respondents sounded more ambitious indicating that their main impetus for investment is to expand their suite of digital capabilities. [2]
The EY survey also reveals that despite there being much chatter of Industrial Internet of Things (I-IoT) strategy implementation by oil and gas companies, only 19 percent of respondents confirmed such a pathway. While 70 percent said they plan to adopt IoT in the next 18 months, 20 percent of respondents flagged the popular concern about cybersecurity threats holding them back.
Wapack Labs believes this to be very important, as it continues to expose the lack of concern with cyber security in the oil and gas push to integrate more and more IT technology into their operations. The report further highlighted significant obstacles faced by the industry in embedding digital technologies and overcoming silo mentalities. Less than a third of respondents said their digital investment vision is "highly aligned" with the views of other senior management colleagues. In addition, 41 percent said reaching agreement on a digital road map from executive teams and the board of directors is a key strategic problem. "There still appears to be a lack of confidence among senior oil and gas executives about how to define and execute their digital vision, and the scope of many businesses' strategies is still too narrow," EY reported. The challenge of re-skilling and best utilization of human resource continues to persist. The human factor remains crucial to digitization, and companies need to address the organizational challenges that inevitably arise when adopting a more ambitious digital strategy.
Wapack Labs and Red Sky Alliance have developed a virtual Trust Officer (vTO) program to better unite the traditional physical and cyber security with human resources and the C-Suite levels of corporations. This to eliminate silos and try to identify insider threats stemming from negligence to actual espionage. Additionally, finding the right balance between outsourcing and in-sourcing also remains problematic for the industry. The EY survey exposed that on average oil and gas allocated just 17 percent of their digital spend to in-house capabilities, opting instead to outsource. While outsourcing can be beneficial at the outset, ultimately, we believe the winners will build integrated, in-house capabilities that embrace the transformative potential of new technologies.
For questions, comments or assistance regarding this report, please contact Wapack Labs at 844-492-7225, or feedback@wapacklabs.com
[1] https://www.forbes.com/sites/gauravsharma/2019/01/12/oil-and-gas-digital-investment-is-surging-but-progress-remains-slow/#74199ee04172
[2] Picture - https://gineersnow.com
