How the Gas and Oil Industry Fostering Innovation in A Volatile Market?

27 March 2024

For a generation, the Mineral fuels, Products and Gas Industry played a key role in framing the core pillars of the economy to build the base for lasting development. From home appliances to industries, vehicles to cargo, and Air travel to Railways, almost every sector of the economy is heavily dependent on this industry.

But the winds of the pandemic, geopolitical tension along with climatic change and technological advancement have drastically affected the Oils and Gas industry worldwide. Further the commitment to carbon neutralization along with the Paris Agreement, Industries are diversifying the production units based on petrochemical sources of energy to renewable energy sources.

Through this blog, we’ll explore how these factors impact the industry’s stability and introduce opportunities amid challenges that can help companies make strategic decisions for further expansions.

If you look at the trade data taken from the Export Genius platform shows, the market size increased by two folds from 2019 to 2022. During the pandemic, the export value drastically fell by USD 442 billion from the previous year. The highest-ever growth in export and import witnessed after 2021, export increased by USD 1449 billion and imports by USD 1673 billion in 2022.

 

***Value USD Billion

Top Importing Countries for Crude Oil and Gas

From 2019 to 2022, the Oil and Gas market witnessed both downward and upward trend. These fluctuating trends remained the same for all top importing countries. For instance, China, the USA, and India become the top importing countries from 2019 to 2022. In 2020, the USA reduced its import of oil and gas by USD79 billion. However, in 2021, China’s imports increased by USD 132 billion, this further accelerated to USD 142 in 2022. This year-on-year growth in import value shows the resilience of the Chinese economy and the robust demand and supply.

 

***Value per USD Billion

Export-Import of Mineral Fuels, Products and Gas

The total market value of industry and top importing countries has extensively been covered with trade data. Now, we will explore product-wise export and import patterns for the last four years.

If we thoroughly go through the table, then we find that Natural gas in a gaseous state increased by around 400% from 2019 to 2022. This drastic increase shows the exponential growth of businesses in this sector across the globe. As per the market trend, growth in the Gas industry will dominate the international market in the coming years as the industries adopt the policy of carbon neutralisation. For complete trade insights into exporting commodities, look at the table.

 

***Value Billion USD

Import of Petroleum oils & oils obtained from bituminous minerals, crude registered double-digit growth and increased by twofold from USD 711 In 2020 to USD 1640 in 2022. On the other hand, the import of Natural gas in a gaseous state increased from USD 113 Billion in 2019 to USD 377 billion in 2022, the same goes with

 

***Value Billion USD

If we further go deep inside the industry, then one may find that the USA and Canada become the largest exporters of Petroleum oils and oils obtained from bituminous, minerals and crude. The market of this commodity increased from USD 29 billion in Q1 to 31 billion in Q4 of 2023, whereas, export of the same commodity by the United Kingdom took a downward trajectory from USD 6 billion in Q1 to 5 billion in Q4 of 2023. For more information, check the table.

 

***Value Billion USD

 

Challenges face by Oils and Gas Industry

As we have already discussed the oil and Gas industry plays a crucial role in shaping the world economy, in short, this industry is backbone of the economic activities. Despite the rapid revenue growth, the industry is facing severe challenges in 2024. Here are some of the challenges.

                        1.     Geopolitical Instability

Continuous geopolitical tension between countries, for instance, Russia- Ukraine, Israel Hamas, Red Sea disruption due to piracy attacks, China- Taiwan issue, etc. have escalated the oil price across the globe. The average price of crude oil in 2020 increase from $39.68 to $76.30 per barrel in 2024.

 

                       2.     Energy needs with Environmental Sustainability –

The determination to make the world economy carbon neutral by 2050, adopted by some advanced countries adversely affects the oil industry by focusing more on natural gas and other source of energy, for instance, the European Green Deal, etc.

                       3.      Technology Disruption –

The rapid advance of renewable energy, like solar energy, thermal power, lithium-ion batteries, etc. with state-of-the-art technology poses severe threats to fossil fuel-based industry.

                      4.     Strict Environmental laws and regulations –

Governments around the world are implementing the strictest laws to control and minimise environmental damages, for instance, blending ethanol with petrol and diesel to reduce pollutants.

                      5.     Volatile Market –

Fluctuation in price is more frequent in this industry, due to this, businesses and countries around the world are looking for a sustainable market in green energy for lasting growth.

Opportunity In Oil and Gas Industry

Now, explore how businesses can take advantage of this wide industry with untapped opportunities.

                      1.     Natural Gas an Emerging Fuel –

Just like crude oil, the demand for natural gas is accelerating worldwide and covering the market share of more than USD 1.3 trillion. Businesses can diversify their fossil-based industry to newly emerging markets.

                      2.     Investing In Carbon Capture and Storage Business –

As the Oil and Gas market is growing, the demand for carbon capture and storage is also increasing. As per the reports, the market value will increase to USD 12.9 by 2030. This emerging market widens the scope for opportunity for newly developed businesses.

                     3.     Rising Demand for LNG –

Demand for Liquefied Natural Gas (LNG) drastically increased from USD 143 billion in 2019 to USD 387 billion in 2022 after geopolitical tension between countries. Europe and Asia emerged as the key players in importing LNG from the world.

                    4.     Technology Advancement –

New start-ups and entrepreneurs can explore the industry by entering with new technologies, and artificial intelligence with advanced drillings to improve efficiency, reduce costs and minimize the environmental impact.

                    5.      Discovering the New Market –

By investing in research and development, industries can explore the untapped opportunities in deep-sea mining, shale gas and others.

 

The mineral fuels, products and gas industry is one of the most volatile markets, which fluctuates with every international event. For businesses, it becomes crucial to enter the industry with well-researched and constructive policies for lasting growth.