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Article: Diversification and transformation in the oil and gas industry

The oil and gas industry is one that has been knocked off balance in recent years. 

Back in June 2014, the sector was enjoying what can only be described as a boom period, the price of Brent crude having reached $115 per barrel thanks to soaring global energy consumption. Yet the benefit of hindsight tells us that the industry’s soils became somewhat sapped of nutrients from this point onwards. 

High prices spurred industry players to begin drilling for new crude, yet demand began to taper off owing to weakening economies. Likewise, zero carbon technologies had begun to enter the mainstream, owing to a global awakening to climate change propelled by ESG demands from investors, demands which you may well be responding to in your own organisation.  

Come January 2015, per-barrel crude oil prices fell by more than half to around $49 per barrel, these figures failing to rebound beyond $80 in the five years that followed.

When COVID-19 hit, the oil and gas tree was upended even further, exacerbating the widespread hardships already being felt by those firms whose roots and livelihoods were tied to these unpredictable commodities. It has been a devastating period for us all, but few sectors have been hit as hard as the oil and gas trade by the crisis.   

As countries, societies and economies around the world ground to a halt in the face of lockdowns built to limit the spread of the virus, demand for oil plummeted, with prices per barrel dropping as low as $19.63 come March 2020.  

For many firms, the past seven years have shown them one truth – that the insecurity and unpredictability of the oil and gas market that is so heavily influenced by drastically fluctuating external factors is no longer a viable nor sustainable path to solely pursue. Some companies, including those with deep roots in oil and gas stretching well over a century, were in trouble.  

In the words of Paul Miller and Shimrit Janes, new roots had to be laid down if these organizations were to survive against the odds.  

Enter the Energy Industries Council (EIC) – a not-for-profit that has dedicated significant resources in recent years to support those organizations looking to diversify away from the sector for which many have been reliant on for numerous years. 

“The number one growth strategy used by energy business leaders in 2020 and 2019 was to diversify away from oil and gas to both renewables and non-energy sectors. ESG is having a major influence on investors and board rooms in some parts of the world, and the diversification trend was also propelled by COVID-19, with more than 50% of companies using it as a catalyst for transformation. Such influences have provided them with the opportunity to consider real and permanent change.  

As a result, many companies have been more resilient than expected through 2020/21, reacting quickly – in weeks and months, not years – when COVID and the associated oil crisis struck, having learnt from the 2014-15 oil crisis when they reacted too slowly and conservatively.”

— Stuart Broadley, CEO, Energy Industries Council 

Many of EIC’s member companies have successfully planted new roots in futureproof energy segments to resist the numerous headwinds that have emerged since 2014.  

Balmoral stands as a prime example for to consider. A company established in 1980, much of its revenue model was tied to the subsea oil and gas sector. Yet, owing to a combination of quick and agile responses to the energy transition trend, coupled with a sound long-term strategy, the firm is now enjoying considerable success in the offshore renewables space. Having been awarded three new contracts within the offshore wind sector, its order intake from diversified sectors is expected to increase from £700,000 in 2020 to £7 million in 2021. 

Global consulting and engineering company, Wood, is another that is successfully diversifying to deliver sustainable growth. Back in 2015, 96% of the company’s revenues were derived from upstream oil and gas, yet today that number stands at just 35%, with the remainder generated from markets such as renewables and sustainable infrastructure. 

Similarly, JoBird – a life safety equipment specialist established in 1986 that was historically heavily dependent on the oil and gas sector – is now also catering to the needs of the offshore wind sector, this transition best represented by a £900,000 contract to supply safety solutions to Orsted’s entire UK and Dutch wind farm portfolio comprising 846 wind turbines. 

These are just three of 61 EIC member companies that have worked tirelessly in the past year to achieve profound, positive, transformational change, moving in tandem with the demands of the market (the remainder set to be unveiled in EIC’s 2021 Survive and Thrive Report later this year). 

For each of them, planting these new roots has been entirely necessary so that they may not only survive, but indeed thrive. 

These examples should serve to reinforce the importance of appreciating, evaluating and, if necessary, reshaping your business’s core. How aware are the people in your organization of its original and foundational roots?  


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