Roughly a year after the COVID-19 pandemic struck the oil and gas industry with the biggest crisis in decades, energy CEOs are confident of industry growth, albeit not anytime soon.

Top energy executives recently told KPMG LLP in the firm’s latest CEO outlook that they believe it could take up to three years for the industry to return to normalcy. KPMG’s 2021 CEO Outlook Pulse Survey included 500 top executives across several sectors from Jan. 29-March 4.

“The results are quite promising and the level of confidence and optimism that we’re seeing is super encouraging,” Regina Mayor, global leader of energy at KPMG, told Hart Energy. “With crude and gasoline prices going up, the confidence of executives in industry’s growth is increasing… In three years, energy CEOs believe 100% that they will be back on track.”

Mayor noted that 37% of energy CEOs see return to normalcy later this year while 20% believe it will come sometime next year. A bulk of energy CEOs (43%) never expect a normal course of business thanks to the COVID-19 pandemic.

The CEOs also stated vaccine rollout and ease of lockdown restrictions as key factors that will contribute to their company’s growth prospects. According to 70% of the CEOs, the return to normalcy will rely on the encouragement of governments in key markets to lift COVID-19 restrictions as businesses are asking staff to return to the workplace.

Further, 47% said a successful COVID-19 vaccine rollout and an adoption rate in key markets with more than half of the population vaccinated, will be significant for recovery. Nearly all energy CEOs (90%) also said that employees will be asked to inform the company when they are vaccinated.

Climate goals

As the oil and gas industry continues making significant progress to fight climate change, 90% of energy CEOs want to lock in the sustainability and climate change gains that they have made as a result of the pandemic, the study found.

Commenting on the finding, Mayor pointed out that even though some progress has been made by oil companies to reduce carbon footprint, the industry still has a long way to go.

“What the industry realized that even with massive reduction in transportation and movement, some estimates show that the global carbon emissions was only down 8% or 9%,” she said.

“It’s a stark observation of how much change we really have to try to achieve in order to meet the goals of the Paris Accord…Although commitments to net-zero have accelerated and we have to lock in what we did but we have to be more aggressive in what we do,” she continued.

Some industry leaders, however, view climate challenges as an obstacle to growth. The study showed almost half of energy CEOs identified environmental and climate change as the top risk to their organization’s growth over the next three years.

Digital transformation

Energy CEOs agreed that the digital transformation of the oil and gas industry has accelerated as a result of the pandemic.

In the survey, 80% CEOs said, within a matter of months, the pandemic accelerated the creation of new digital business models and revenue streams. Meanwhile, another 10% said progress on the digital front accelerated sharply, putting them light-years ahead of where they expected to be.

“Clearly, digital became incredibly important during the pandemic and those companies that already had a strong digital foot print were more successful than others,” Mayor said.

The significance of digital tools for the oil and gas industry is different than other sectors, she added, because automation in oil and gas is applied primarily for cost-saving and efficiency. Automation, artificial intelligence and digital communication are the top areas of investment in new technologies for the energy sector, according to Mayor.

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