Navigating and leading corporate strategy amid energy transition uncertainty

Abstract

Long-term planning has become increasingly challenging for oil and gas players as uncertainty mounts over the future of energy systems. Viewing the future through the lens of different scenarios is one potential solution, but to maintain stable project pipelines, companies must continuously make investment decisions and land on specific macro parameters. To be more agile in a time of uncertainty, some companies are shortening their guidance horizon and prioritising projects with shorter payback periods. The uncertainty surrounding the future of energy markets is greater than ever, and long-term forecasts provide limited clarity on where the markets and different players are heading with their energy transition plans. For any corporate strategy to succeed, it must reflect the external market environment while being agile enough to mobilise internal synergies when markets change, new risks emerge and opportunities arise. At the same time, it should leverage company’s strengths and legacy experience to maximise the value of its contributions. In this paper, we explore a wide range of new key performance indicators that must be integrated into the decision-making process to understand the most relevant market positioning for oil and gas companies’ transformation strategies, including those of Australian players. We examine the progress being made and where there is room for improvement. These new key performance indicators can be categorised into three pillars of the oil and gas energy transition: resilience of supply, decarbonisation and diversification.