Digital revolution in oil and gas industry is happening at the right time – Huawei

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Alaa Elshimy
MD & SVP, Huawei Enterprise Business Group, Middle East

The oil and gas industry, like so many other global industries, is having its traditional business models disrupted by the advent of digital transformation and technological advancement.

 Industries are being forced to embrace emerging technologies in order to survive and those that have embraced technological change have enhanced their operational efficiency and have significantly reduced costs.

 The oil and gas industry is one of the most powerful industries in the entire world and its performance can affect the global economy. Some of the world’s most profitable companies come from the oil and gas sector and many possess a lot of political power and leverage as a result.

 Saudi Aramco’s plan to publicly list 5% of its company on the New York Stock Exchange to fund the Kingdom’s Vision 2030 digital transformation program was set to be the world’s biggest ever IPO. The Saudi Royal family decided to temporarily suspend the IPO until 2021.

However, despite enduring a torrid number of years, the oil and gas industry is bouncing back, and the reason, according to analysts, is largely down to the sector opening its arms to emerging technologies such as AI, Machine Learning, Data Analytics and Internet of Things which are transforming its existing operations.

Alaa Elshimy, Managing Director and VP of Huawei Enterprise Business, Middle East, believes the digital transformation that is happening in the industry has come at the perfect time.

In this byline, the Huawei executive illustrates clearly why he believes it’s the right time for the oil and gas industry to embrace technology and claims that the Middle East has been driving innovation through its oil and gas operations. He also highlights why he believes the new mindset within the energy sector is presenting new opportunities for innovative companies for Huawei to generate new revenue streams.

“In the conversation surrounding the digital transformation, it’s fair to say the oil and gas sector wasn’t invited to speak. It’s been an incredibly challenging few years for the industry. The bouncing price per barrel, the global political rhetoric of moving towards more sustainable energy models, and the stark rise of large-scale industry-focused technologies making business digital all contribute to nervous boardrooms at the world’s biggest oil and gas companies.

“Swedish manufacturer Volvo announced that from next year, it wouldn’t be launching any car that isn’t electric or hybrid. Germany and France both plan to ban the internal combustion engine within the next 20 years or so. And many analysts are questioning whether or not the price of oil will ever see a meager $100 per barrel again.

“Call a spade a spade; the outlook for the last few years has been fairly bleak. Guy Stephens of Rowan Dartington last year said, “If they fail to adapt to the changing landscape of future energy demands, they will find themselves confined to the history books.”

“Frankly, I don’t buy this narrative. In fact, the Middle East in particular has been aggressively driving innovation throughout its oil and gas operations – taking full advantage of the ICT creations that address the entire industry chain. Exploration, production, storage, transportation and distribution have been fine-tuned to take advantage of the digital transformation.

“Just last November, we held the Global Energy Summit in Abu Dhabi, under the theme ‘Leading New ICT for Higher Safety and Efficiency in the Oil and Gas Industry’. More than 200 of our valued customers, partners and senior experts from the industry gathered to discuss positive developments and opportunities, and the tone was one of optimism and energy – so to speak.

“What were we looking for in such conversations? To understand our collective plan to reduce costs, ensure safe operations, achieve sustainable development, and boost the industry’s transition into the smart era.

“The competition is fierce, and this transition needs to be swift and smooth. When the boards came down at the Global Energy Summit, the mandate had been set. The industry has opened its doors to new technologies. The task now is for global ICT companies to play their role in making this transformation happen.

“The key will be transitioning to smarter operations, lowering manual input, and reducing risk in day-to-day task management. Today, the average oil recovery rate industry-wide is around 37 percent, and more than 70 percent of oilfield assets aren’t effectively monitored and managed. Worse still, 90 percent of incidents arise from man-made improper operations. These are labor-intensive and cost huge amounts of money for an industry that’s been struggling with bottom line issues for a number of years now.

“Along with many other industries, we identified the digital transformation as the most promising pathway for confidently addressing these challenges. Huawei has spent many years gathering a deeper understanding of the oil and gas sector to better advice and act in this region. Through co-operating with more and more industry partners, we have successfully launched a number of ICT solutions in High Performance Computing, digital pipeline, and enterprise operations management.

“In fact, we’ve applied these solutions in 45 countries around the world, serving 70 percent of the global top 20 oil and gas companies. These projects demonstrate the ability the sector has to transform when served by the right partner ecosystem.

“Typically, the industry is slow to adopt. That might come down to its historical wealth, which has protected it from the necessity of innovating. But nobody is under that illusion anymore, and these stark changes have been well received. Today, we’re living in an environment where you innovate or you disappear, and although the oil and gas sector moved a little slower than other industries, it does now have the added benefit of understanding the rate of change, and the value of investment.

“With that in mind, I am confident that the future, though different for sure, remains positive for the oil and gas sector at this time.”