Asset management, the oil industry’s way of survival to future regulations

Published: June 25, 2023

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Author: Ing. Carlos Álvarez, June 25, 2023.

Introduction

In a world increasingly concerned about climate change and reducing carbon emissions, the key to ensuring the survival of the oil industry lies in the management of its assets. The industry has faced numerous challenges throughout its history, but none compare to today’s pressure to adopt more sustainable practices and comply with future environmental regulations.

Asset management refers to the planning, organization and supervision of a company’s physical and financial assets to maximize their value and performance. In the case of the oil industry, this implies optimizing available resources, improving operational efficiency and reducing environmental impacts in the face of increasingly demanding future regulations.

Asset management helps the survival of the oil industry — Figure 1 – Asset management helps the oil industry survive

Optimization of production and maintenance

One of the main areas where asset management can make a difference is in optimizing production and equipment maintenance. Using advanced technologies such as the Internet of Things (IoT) and data analytics, oil companies can monitor the performance of their assets in real time, identify potential failures or efficiency issues, and proactively take corrective action. .

This not only reduces maintenance costs and improves equipment life, but also reduces the risk of accidents or spills that could have a negative impact on the environment.

Portfolio diversification

Another fundamental aspect of asset management in the oil industry is portfolio diversification. With upcoming regulations aimed at reducing reliance on fossil fuels, it is vital that oil companies start investing in renewables and other clean energy sources.

By diversifying their portfolio, companies can mitigate the risks associated with declining demand for oil and gas, while positioning themselves as key players in the transition to a low-carbon economy.

The idea behind portfolio diversification is really intuitive. It is about opening multiple positions to reduce the total risk of the portfolio, and this must be applied to the investment. As all investments involve risk, proper diversification is crucial as it is expected to reduce the overall risk of a trading portfolio.

Carbon footprint reduction

Asset management also plays an important role in reducing the carbon footprint of the oil industry. By implementing energy efficient practices, optimizing production processes, and using cleaner technologies, companies can significantly reduce their carbon emissions.

This not only contributes to the mitigation of climate change, but also helps to comply with the stricter environmental regulations that are expected to be implemented in the future. In the fight against climate change, decarbonising the industry is an absolute priority.

Asset management in the oil industry involves planning, organizing, and supervising a company’s physical and financial resources with the aim of maximizing their value and performance. In this sense, asset management has become an effective response to address the environmental impact of the industry and comply with the strictest regulations.

Conclusion

Asset management has become the cornerstone of the oil industry’s survival in an ever-changing world. The adoption of sustainable practices, the optimization of production and maintenance, the diversification of the portfolio and the reduction of the carbon footprint are key elements to face future challenges and guarantee the long-term viability of this industry.