The Middle East’s energy sector finds itself at a crossroads. Global demand is at its highest, and the region has resources in abundance, but shifting legislative, environmental, consumer and operational requirements mean that there has never been greater need for efficiency and accountability in how that energy is extracted and delivered.
The urgency has only risen as a number of economies look for new ways to break their reliance on Russian oil and gas in the wake of the invasion of Ukraine. According to the European Centre for Security Studies, as of 2021, two-fifths of the European Union’s natural gas imports come from Russia. The EU has committed to cutting its reliance on Russia by almost two-thirds by the end of 2022.
At the same time, leaders in OECD countries are under pressure to scale down domestic extraction of oil and gas as part of energy transition commitments. Producers in the Middle East will need to pick up some of that slack, but the manner in which extraction is conducted, and the push for “cleaner” oil and gas, demand far greater monitoring, reporting and optimising of production than ever before.
For many, the answer lies in “Oil & Gas 4.0”; optimising the use of big data in order to make best use of digital solutions such as AI, IoT, robotics, advanced analytics, cloud and edge computing. From manufacturing to financial services to healthcare, a growing number of sectors are exploring the possibilities of such digital transformation, but the energy sector has been more circumspect when it comes to embracing change.
Playing catch up
“We always see the most technological advancement come from the military sector first,” says Mohammad Salah, Microsoft’s head of enterprise and industry marketing for the Middle East and Africa, “then telecoms, then government and consumer, before the oil and gas industry finally catches up.
“That needs to change if oil and gas in the MEA region hopes to stay competitive in a world of decreasing emissions. The sector must reposition itself as a leader in technological advancement: which has the added benefit of making a hazardous industry safer to work in and reducing the impact on human life more generally.”
Salah sees this predominantly as a question of industry – as opposed to regional – culture. After all, he says, other sectors in the Middle East have not been slow to embrace new digital technologies at an unprecedented rate in the wake of the pandemic.
“Digital transformation will have to play a leading part in enabling sustainability goals in the Middle East,” he explains. “One example could be low carbon strategies augmented by machine learning, or the development of new solutions for minimising emissions. We could also see workers being given more digital support with remote technologies, virtual reality training, and senior expertise which has been affected up to now because of travel restrictions.”
Seeing the big picture
But MEA operators also face challenges specific to the region when it comes to harnessing digital solutions; conditions and requirements which have the potential to either enhance or hinder the sector’s ability to fully embrace new technologies. At COP26, for example, a delegation of European countries committed to fully ending domestic oil & gas extraction by 2040, and while MEA can benefit in the short-term from these other economies ceasing production, they must also prepare for longer-term fall in demand. This would require business transformation on an unprecedented scale, with digital solutions expected to be a major force in delivering that.
“State economies here are heavily reliant on oil and gas, and this needs to be kept in mind when we discuss the global project to reduce CO2 emissions,” Salah says.
“This doesn’t mean incentivising oil and gas companies per se, but stakeholders need to think about creative ways to invest in the economy, supporting the region’s digital transformation, and thinking creatively about the bigger sustainability picture.”
In securing and enhancing both immediate and long-term operations, Salah sees harnessing the power of big data as an essential springboard for growing MEA’s energy sector; a way of safely managing the transition of legacy platforms toward better harnessing technologies such as AI, cloud and edge computing.
The key, he says, lies in taking concrete steps such as making smarter use of IoT, upgrading control systems to collect more data, and hiring more tech-literate staff to monitor data for the daily operation of business. Not only can this help the oil & gas industry adapt to the pressures of global sustainability targets, but it will ultimately be more cost-efficient, more sustainable and more productive for businesses in the long run.