A Year of ChangesBy Guido van der Zwet | Mon, 04/05/2021 - 12:53
March 2021 marks one year that we have been in home office due to COVID-19. Today, vaccines are the talk of the town and people are looking forward to going back to “normal.” But are they? There have been many discussions on what will happen in the industry and how “new” business will take place. Here is how I see it unfolding.
Oil and Gas
There are many discussions about clean energy and the energy transition. People tend to forget that oil and gas is the basis for many products, such as plastic and steel, which are found in thousands of products. Do not get me wrong, clean energy is important and the only way to guarantee a future for the planet is to lower the CO2 footprint, but oil and gas will be with us for many decades to come. In February 2020, daily oil production and demand was around 100 million barrels per day and the oil price (Brent) was at US$56 per barrel. Since then, we have witnessed negative prices. But the price has steadily risen, hitting US$69 on March 12, 2021. The average demand for oil dropped to 65 million barrels per day during the pandemic and OPEC members had to come to strict agreements to lower production. With the vaccination leading to an expected recovery in trade, oil prices are already increasing.
Many majors, including Total, Shell, Equinor and ExxonMobil, have announced major cuts in exploration for the coming year(s), which might lead to a scarcity in oil. Oil supply and demand has always fluctuated due to supply and demand so we will see what happens.
The investments in the renewables sector are growing by the day. If you look at the offshore wind industry, which has become a major source of income for iPS over the last decade, you see many countries developing their plans at the same time. Europe is strong and the UK is the leading market but will soon be overtaken by China. There are many developments in Taiwan, huge plans for the US East Coast, Japan, South Korea and most European countries, to mention a few.
The interesting part is that the traditional dredging and oil and gas services companies are moving into offshore wind. There are very few offshore wind installation vessels available in the world, and they will have to think twice about where to tender and how to move forward. They have golden times ahead and many more vessels are being built.
You are also seeing traditional oil and gas companies changing their names and getting into offshore wind; many companies have dedicated large percentages of their investments for the future in offshore wind projects.
Last but not least, a couple of FPSO companies are now moving into floating offshore wind projects, using the knowledge from their mooring buoys. These are interesting developments that are here to stay.
Regarding business development, I am responsible for global commercial development within iPS and major changes have taken place. Where I should have been on at least eight intercontinental flights to visit customers and attend the most important events around the globe, I was on zero flights over the past year. We have seen big events go virtual and hybrid, some with better experiences and results than others. I feel there is a huge gap that needs to be breached in order to make hybrid events work. Will there be a proof of vaccination requested at trade fairs? Is that allowed? Many questions still need to be answered.
Many companies have seen that savings made from the stop on business travel are huge and that will probably not return to the old standards before 2020. Virtual meetings have become the standard and have worked well. In my experience, there is still nothing like a one-on-one meeting; you usually learn more in the small talk while walking from the reception to the meeting room and back, or in the informal events around formal events. But much can still be done virtually and you do not have to get a flight for each meeting. This barrier has been broken and will change business travel for good.
Especially in the offshore world, many ratings are sourcing from countries like the Philippines and India; however, these were the nationalities with the most trouble getting into certain countries. Companies were forced to use personnel from different parts of the world. In my personal experience, I am pleasantly surprised by the flexibility of our own staff and all the contractors and thankful for the year we have had.
Travel restrictions have been difficult in most parts of the world. I wrote about that in my last article. I am most surprised that there is not yet a standard for travel, quarantine and test standards. If there is one thing that we can improve in the future it might be to have some protocols in place globally.
Many people have lost their jobs, many will have to change industries; we have seen that as many industries suffer, others thrive and emerge. Think about logistics around package delivery and other delivery services such as food and groceries.
One of the biggest changes we will see in the near future will be in real estate. Offices will become smaller and homes will become bigger. Many people would like to have a decent workplace at home and spend less time in traffic and more time at home. There are many companies that have announced they will not return to the office this year and many more will return only for a few days a week. The traditional working week with 40-60 hours in the office seems to be in the past. The future will tell how it develops, but the working environment has changed for sure. Less small talk as a result of people working at home and away from colleagues has also led to more efficiency in many companies, dividing the day in different stages where people have discovered whether they work better very early or late. People are also able to enjoy more flexibility around work to be with family, or to work according to the curfew imposed in some countries so they can get more done during day when they can go outside and work in the evening.
All in all, it has been a year that seemed like a big experiment in efficiency, home office and virtual meetings. I am curious how you experienced the year and see the future.