Oil, gas sector must embrace tech to remain relevant


SAP Managing Director for West Africa, Titilayo Adewumi

JOHANNESBURG, (CAJ News) – AS the world shifts to cleaner and renewable forms of energy, the oil and gas sector industry in Africa must embrace technology in order to drive efficiencies, improve sustainability, unlock alternative revenue streams and transform operations.

This is the advice of a technology executive, Titilayo Adewumi, who noted the oil and gas sector was facing an existential threat, and technology was key to help transition the industry to a future beyond the barrel.

Adewumi, Systems Applications and Products (SAP) Managing Director for West Africa, was responding to questions from CAJ News Africa.

“Companies in the region’s oil and gas sector are confronted by a singular question: is there a future beyond the barrel? Can the sector optimise its performance, drive greater sustainability outcomes, and pivot into new revenue streams?” Adewumi queried.

“The oil and gas sector is absolutely critical to West African economies. Crude oil production in the region reached 1,8-million barrels a day in 2021, with Nigeria, Ghana, Cameroon, Ivory Coast and Niger leading the way,” he added.

While West Africa is the oil hub, there are vibrant sectors in Central Africa (Cameroon, Chad, Congo, Equatorial Guinea and Gabon) while Angola, in the Southern African region, is the second largest producer in the continent after Nigeria.

Mozambique, in the southern region again is on the cusp of a liquefied natural gas boom while in North Africa countries include Algeria, Egypt, Libya and Sudan with South Sudan the only East African nation with abundance of oil and gas.

Adewumi said while the world was transitioning away from fossil fuels, the oil and gas sector would continue to play a vital role in the continent’s economic growth.

He cited the McKinsey data that suggested Africa’s energy demand could grow by 30 percent by 2040. This is well ahead of growth in global energy demand of around 10 percent over the same period.

“The oil and gas sector will be central to supporting the continent’s growing energy demands. However, there is no doubt that the sector must improve its sustainability efforts and leverage technology to more efficiently manage its operations, assets, and people,” Adewumi said.

He said there were abundant digital transformation opportunities for the oil and gas sector provided they embraced readily available technology.

“Arguably the greatest opportunity for West Africa’s oil and gas sector is the adoption of technology to drive efficiencies, improve sustainability, unlock alternative revenue streams and transform their operations.”

Based on SAP’s work providing digital technologies to leading oil and gas companies in the region, he said there are three key opportunities for the sector to help transition to a future beyond the barrel, which comprise becoming a sustainability leader, scaling new capabilities with the cloud as well as smarter operations with intelligent asset management.

“Oil and gas companies face huge threats to their business model as the world shifts away from fossil fuels toward more sustainable, clean energy sources,” the executive said.

“However, it is a significant task to completely change business models without it having a severe impact on companies’ productivity and profitability,” Adewumi said.

A report by Oxford Economics and SAP identified a small group of oil and gas companies that followed sustainability best practices, improved their sustainability outcomes and enhanced their brand reputation.

To become a sustainability leader, oil and gas companies must invest in data analysis, construct a model that measures actions against performance throughout the company’s sustainability goals and capture accurate data to inform company leaders of carbon output.

“The return on investment for becoming a sustainability leader is significant,” Adewumi said.

The Oxford Economics and SAP report found that sustainability leaders enjoy robust bottom lines, are substantially more likely to experience profit margins in excess of 10 percent and have increased opportunities for significant long-term value for the business, people and society as a whole.

Cloud computing is hailed as offering oil and gas companies a significant boost in agility, allowing downstream and process sectors to leverage technologies for more efficient and optimised operations.

“By streamlining and scaling cloud capabilities as needed, oil and gas companies in the region can build nimbler corporate structures and unlock additional efficiencies, which can make a significant difference to such a labour-intensive industry,” Adewumi explained.

SAP credits its S/4HANA Cloud offering for unlocking a wide range of solutions designed for greater efficiency.

This includes upstream contracts management to maximize asset usage and productivity, commodity management solutions that integrate procurement and sales into core financial and logistics processes, and solutions aimed at improving bulk transportation, inventory management and operational decision-making.

“Technologies such as intelligent asset management – a suite of solutions that brings collaborative asset intelligence to maintenance and operations – must be enhanced to meet the changing operational objectives and efficiency requirements that oil and gas companies are subject to,” Adewumi said.

Companies that have adopted intelligent asset management unlock powerful predictive capabilities are best placed to avoid unexpected downtime due to breakages.

SAP reports its Asset Intelligence Network allows oil and gas companies to collect and track equipment information in real time, with internet of things (IoT) connected devices integrated to a cloud-based business network for maximum transparency and control.

Adewumi reiterated that by embracing technology and leveraging key solutions to improve operational efficiency and sustainability, the West African oil and gas sector can continue to be a valuable player in the region’s economic growth and development.

“With new capabilities and greater agility, the sector could unlock opportunities to exploit new revenue streams for customers across the value chain,” he concluded.

– CAJ News

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