Amish Sabharwal, Executive Vice President, Engineering Business, AVEVA. (Photo Courtesy of AVEVA)

Collaboration, Technology Keys to Resilient Oil and Gas Industry

OCTOBER 07, 2022

Jakarta. When the world was recovering from the Covid-19 pandemic, Russia launched a full-scale invasion of Ukraine.

As a result, we entered a new uncertainty marked by the oil price hike. Followed by the rising price of other commodities whose production directly or indirectly depended on oil supply.

The crude oil price, which reached US$120 per barrel in early March, had gone down to US$86 per barrel. This was cheaper than when the Russian invasion began on Feb. 24. However, the Russia-Ukrainian war, coupled with the looming global recession and other factors, have caused uncertainty in the oil and gas industry.

Amish Sabharwal, the executive vice president of engineering business at tech firm AVEVA, said in a recent interview that the energy business was remarkably resilient. Having been in the energy business for almost 25 years, he admitted to having witnessed lots of ups and downs in the energy industry. But according to Sabharwal, the world's mistake was that we did not understand the long-term implications of oil and gas on how we operate our world today.

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“During Covid-19, energy requirements came down, so we canceled energy projects. But that was a mistake because they quickly reacted to problems. And I think that some countries, specifically North America and mostly Europe, reacted to short-term things to energy,” Sabharwal said.

“And as a result of the Ukraine conflict, Europe is the one that is hurt the most. But they have lots of money. So, they can buy oil, and then second or third-tier countries have trouble buying that oil because it goes to Europe first," he added.

The industry's high resilience has allowed numerous new projects to be sanctioned with new ships built to move oil and gas across the globe, according to Sabharwal.

“Our software helps them become more efficient to build these projects faster and, more importantly, sustainably. They're trying to build the ships with net carbon zero in mind to reduce the amount of carbon dioxide we generate,” he said.

AVEVA is a London-based industrial software company that develops a digital twin to help customers develop resources --including oil and gas, chemicals, mining, food and beverage or any industrial processes-- responsibly. AVEVA's largest clients come from energy producers across the globe -- from North America to Europe, as well as the Asia Pacific. State-run oil company Pertamina is one of AVEVA's clients.

Sabharwal said that the Russia-Ukraine war has inflicted a short-term shock in oil supply and demand. But with the help of technology, the industry's resilience could drive up the oil and gas supply in the medium term. And in the long term, Russia would lose its energy leverage as countries can buy oil and gas elsewhere.

According to Sabharwal, collaboration is key to building a more resilient and flexible supply chain in times of crisis. And digitalization is the solution to be more collaborative. Just like Facebook or Google, the ability to communicate and share information is one strategy to make the energy industry do better. Existing oil companies may not be sharing their information today. But for the industry to become more resilient, they need to collaborate through technology.

Renewables Play Significant Role But Cannot Replace Oil and Gas

Renewable energy could play a significant role in dealing with future energy price hikes. However, it will unlikely entirely replace oil and gas, Sabharwal said. 

"The reason is everything we have today —plastic, phones, etc.— is made from oil. Renewables can change how we drive cars or how we move around the world in terms of transportation, but it will never replace this material. So oil and gas will always have a place."

Renewable energy storage requires a hefty investment and a lot of infrastructures. As we transition, we still need oil and gas to build renewable energy storage infrastructures. Energy companies are also investing in becoming net-zero.

“I have just had a meeting with the chief executive officer of Pertamina. Five years ago, the conversation was about how do I increase profitability. Today, the conversation was about how do I reduce carbon emissions. How do I capture carbon? How do I store that carbon? How do I build a new facility that is net carbon zero?” Sabharwal said.

“So, while making money is important, every energy company in the world today is thinking about how I make energy sustainable.”

AVEVA develops software for engineers to "solve all these riddles". 

"We have all the technology in the world to be net zero. We just need to apply it. We can capture carbon from oil and gas and store it. We can capture plastic instead of dumping them into the ocean."

Digitalization to Help Indonesia's Energy Transition

The global energy crisis has taken a toll on Indonesia. The country is now a net oil importer and gas exporter. Fuel price hike becomes inevitable because Indonesia is the second customer after Europe.

“The crisis is going to teach us, as in my message to young people, that oil and gas are not going away. It is there, and we should not be trying to kill oil and gas because, in short-term thinking, we need oil and gas to make money to help us become more sustainable in the future,” Sabharwal said.

Sabharwal added digitalization could help Indonesia become more efficient in how they develop their resources and what they import. According to Sabharwal, AVEVA's technologies can help Indonesia's energy transition and net-zero goal.

“In operations with Pertamina, for example, we are building systems in their existing infrastructure to monitor carbon from all the way, from oil to gas or gasoline, to see how they can first see where the carbon is, and then track it and then capture it. So, we have two things: help our customers build net carbon zero facilities and help our customers reduce carbon emissions in operations,” he said.

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