Asset/portfolio management

Balancing the Barrel and Beyond

Oil and gas companies play important roles in the global push for energy security and carbon reduction. Here’s how they can excel at both.

Manager balancing out fossil fuels and renewable energy resources in the palm of his hands.
Getty Images

Back in the early stages of the pandemic, a high-ranking executive at GALP told me the Portuguese company was positioning itself to become “the Amazon of Energy,” explaining that a fully digitalized operation and a diverse portfolio of products and services that extend well beyond GALP’s oil and gas roots would enable the company to thrive, even in the face of extreme disruption.

Now, more than 2 years later, the disruption in energy markets has indeed reached extreme levels due to the war in Ukraine, inflation, economic uncertainty, changing climate, the global push to decarbonize, and yes, even the remnants of the COVID-19 pandemic. All of which is testing the ability of oil, gas, and energy companies to respond to rapidly changing market signals and energy priorities.

Doing business in highly volatile market conditions has long been a strong suit for hydrocarbon-focused energy companies. Now, amid a unique confluence of factors, these companies are being asked to be more responsive, agile, and Amazon-like than they have ever been, with the ability to rapidly read the signals they’re getting from the market, from geopolitical forces and other sources, then respond, reprioritize, reallocate, and scale accordingly. That could mean producing and exporting more liquefied natural gas supplies for the European market to fill the void left by Russia, for example, or accelerating timelines for renewable energy production projects to reduce reliance on coal for electricity generation.

How can traditionally hydrocarbon-focused companies answer the call—and in doing so, take advantage of the opportunities that today’s unique market dynamics present? I see five keys to maintaining a high level of operational and supply chain readiness, without compromising near-term or long-term profitability.

1. Build a diverse portfolio of revenue streams that balances today’s realities with tomorrow’s priorities.

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