Rethink strategy, look to India and China, say Big Oil bosses

The oil and gas sector needs to fundamentally rethink operational strategy and learn to work at lower oil prices, according to chief executive officers of several major oil and gas companies who are present at the two-day OPEC International Seminar in Vienna, Austria.

Speaking on Thursday, Ben van Beurden, CEO of Royal Dutch Shell said, “The global energy business is experiencing a profound change; China and India will drive demand as oil companies increasingly look to emerging markets.

“Furthermore, the world’s energy system needs to move on from a traditional market to one that is more inclusive of renewables; a world where we’ll require more energy but fewer carbon emissions and more efficiency. The oil business must understand that public opinion is in favour of such an approach.”

Earlier, Chevron’s chairman and CEO John Watson commented that aspirations of consumers in emerging markets, especially middle income earners, would dictate how and at what pace lifestyles progress, thereby influencing energy consumption patterns.

At same event, Total CEO Patrick Pouyanne said that the industry will have to rethink its strategy in wake of the oil price decline. “If prices remain at $60, we will have to find a way to make projects profitable."

Meanwhile, Claudio Descalzi, CEO of Italy's Eni felt the seesaw of oil price is likely to continue for a while yet. “If oil prices recover, shale production will go higher again. So we need to get used to a totally different dynamic.”

Ryan Lance, CEO of ConocoPhillips told OPEC delegates unconventional was “here to stay”.

“Shale plays – where gas followed by oil exploration meaningfully took off in 2005 and 2011 respectively – have seen a 30% reduction in operating costs, keeping them going at lower oil prices,” he added.