With COVID-19, oil-price volatility, and massive overproduction, process companies have had to navigate through endless disruption. The simple human cost of COVID-19 is already being measured in lives changed, economies and supply chains disrupted, supply and demand volatility, futures made uncertain, and loved ones lost.
Yet, there is another casualty to the COVID-19 outbreak that is already apparent – the status quo.
The Cost of Status Quo
Before COVID-19, energy and chemical companies had high growth, earnings, and cash flow goals which appeared doable at $60 per barrel of crude. Those companies had plans to invest in new projects, continue global expansion, and focus on R&D initiatives.
However, with the historic low prices that we’ve seen in 2020, every energy and chemical company is facing the startling fact that their business plans are now worse than outdated; they are irrelevant. Choosing to follow their current plans could be detrimental to their success, or even the survival of their businesses. The truth is, the way these companies buy, sell, and engage with customers has suddenly changed. Planning for the impact of that change is consuming the industry — especially as oil and gas prices change every minute.
Some things, however, are becoming clear:
While the shift to digital has been part of most chemical, utilities, and oil and gas companies’ business plans for the last few years, the global shift to working remotely, for those that can, has foundationally transformed how businesses interact with their employees and customers. Buying and selling was already rapidly moving to a virtual space, driven by changing buyer preferences for online commerce. Energy and chemical companies will need to continue to adopt this approach for a large portion of their transactions in the future, based on both necessity and the realized gains in productivity.
What does this mean for energy and chemicals as we know it?
There will be three phases to the business impact:
- Short-Term, Survival Phase
- Mid-Term, Realignment Phase
- Long-Term, Optimization Phase
What should energy and chemical companies should do in each of these three phases? Read this eBook to find out.