5 Oil And Gas Challenges That Facing Companies

Posted on Dec 18, 2022 at 07:12 PM

It seems clear now that oil and gas challenges have increased after the oil and gas industry has become one of the most important industrial sectors in the global economy, especially since it is a source that generates billions of dollars annually. Being an industry constantly creating new opportunities, it is also very complex, and one must pay attention to its many challenges.

Kindly read our article to learn more about the top 5 oil and gas challenges and effective risk management in the oil and gas industry.

What are the biggest oil and gas challenges that companies are facing?

The availability of oil and gas every year is getting thinner while oil and gas consumption is increasing. This condition will also make the needs of many countries grow. Therefore, you should manage oil and gas natural resources with the principle of usefulness, not as a commodity. 

In addition, the benefit of directing these investments to create more job opportunities and increase economic growth cannot be denied. Significant and complex challenges accompany the position of the large oil and gas industry.

Here are 5 of the most important oil and gas challenges to consider when doing business in the oil and gas industry:

1- Reduce Production Costs

Let's start with the first challenge of oil and gas: cost reduction. Which is one of the main challenges facing companies operating in the oil sector.

To keep your company competitive, reducing the costs of producing raw resources and derivatives extracted from them to the lowest possible value is necessary.

Many oil and gas companies have adopted cost reduction as an important strategy in their workflow. With the global economic recession and the constant fluctuations in oil prices, this strategy has become a safety factor for companies and a proper step to ensure the company's progress and development. This strategy enables companies to achieve the planned production quantities at a lower cost.

Over time, equipment will inevitably become less efficient, less reliable, and more prone to errors or breakdowns. This leads to higher production costs.

But companies can avoid this by upgrading critical equipment and systems. For example:

• Measurement Equipment 

You will have more reliable readings and fewer errors by upgrading measurement equipment. Which leads to higher revenues.

• Safety Systems

Continuous updating of safety systems helps in reducing accidents and keeping production going.

• Pressure Systems  

Upgrades to pressure systems will help your operation run more efficiently. This contributes to higher production and better revenue.

• Radar Equipment

Having the best radar technology will give a better visualisation of the operations. This helps avoid spills and track the progress of the production process from oil extraction to shipping.

2- Improve Company Performance 

The improvement and development of the company's performance are one of the most critical challenges of oil and gas. Often companies need to search for innovative solutions to achieve company's productivity and goals more than ever before.

To preserve oil and gas reserves, each company seeks to extend the life of the invested sites and find new sites for investment to achieve its goals and aspirations.

What helps improve the company's performance is the modernisation of the leading equipment and systems mentioned in the above item. Highly reliable systems mean fewer production shutdowns due to errors, accidents, or other conditions. Ultimately, these will lead to better data collection, higher production rates, and reduced financial losses resulting from downtime, reflecting positively on and improving the company's overall performance.

3- Asset Protection

Security concerns have always been one of the biggest oil and gas challenges companies face, especially if the projects are in conflict zones or areas of war and turmoil.

We note that the economic value of oil resources makes it one of the main targets for terrorism, theft, and piracy, significantly increasing the damage to companies. For example, in 2016, when some terrorist attacks targeted oil transportation lines in Nigeria, which resulted in a decrease in the level of production by about 36%.

In addition to security threats or health impacts, in 2020, when the COVID-19 virus swept the world, most companies reduced their workforce and even evacuated their locations in some cases. At that time, the assets were more at risk.

4- Maintaining The Safety Of Employees

The oil and gas industry is one of the most dangerous industries for employees, both in the field of work and in kidnapping incidents. We see this clearly in developing countries that suffer from wars and turmoil, such as Africa, Latin America, Asia, and the Middle East.

It is worth noting that the kidnappers usually target the oil institutions because they are vibrant facilities for theft. However, the matter is not limited to the motive of money, as some groups follow this method as a form of propaganda or to convey a political message.

5- Improve The Environmental Footprint

The last challenge of oil and gas, and the most important and subject to constant discussion, is the need to improve the environmental footprint and work on decarbonisation. We all know that extractive industries, particularly oil, cause severe environmental damage.

It is worth noting that the oil and gas industry is one of the most significant contributors to greenhouse gases (methane) and climate change. The closure resulting from the spread of COVID-19 raised awareness of the environmental crisis globally - as a result of the decrease in emissions and pollution by good values ​​during that period.

However, the changing weather patterns resulting from climate change directly affect operations. Likewise, natural disasters such as floods and earthquakes affect the progress of production processes.

This industry is full of strict controls and regulations on the issue of the environment. The existence of strict environmental standards makes your company rethink extraction, production, and distribution methods. You can maintain the oil and gas company’s license to continue operating.

In Conclusion,

We are all aware today that the oil and gas challenges and threats are constantly evolving. With so much uncertainty and instability, the speed and accuracy of actions and decisions taken to avoid everything new are essential in maintaining the company's stability and progress.

In light Of this, London Premier Centre is honoured to offer Oil and Gas Training Courses London, which we advise you to follow to keep yourself informed of everything new in this speciality.