E&P World View: Role of Oil Industry in the Energy Transition

[Editor's note: This story originally appeared in the April 2020 edition of E&P. Subscribe to the magazine here.] 

The International Association of Oil & Gas Producers (IOGP) describes itself as the voice of the global upstream industry. Its members produce 40% of the world’s oil and gas and operate around the world in places like the Americas, Africa, Europe, the Middle East, Asia and Australia. According to the association’s website, the IOGP serves industry regulators as a global partner for improving safety, environmental and social performance.

The IOGP provides as a forum in which its members identify and share knowledge and best practices to achieve improvements across different facets of the industry. The association has 84 members, including leading global producers and many industry trade associations.

In January 2019, the IOGP appointed Wafik Beydoun as its new regional director—Americas. Beydoun has more than 30 years of experience in the upstream oil and gas sector, most recently serving as Total’s general manager and country chair in Kuwait. He’s a former chair of the Offshore Technology Conference. He has held a variety of leadership and technical positions in the U.S., the U.K., France, Angola and the United Arab Emirates.

Beydoun talked with E&P in March in an exclusive interview about his views on the current state of the global oil and gas industry, particularly in the era of essential discussions on the role of the industry in the energy transition and with regard to climate change.

E&P: What is your perspective on the current global energy demand, and how it will impact the industry considering the current commodity prices?

Beydoun: Until recently, global demand for oil and gas was at its highest level ever, with particularly dramatic growth in Africa, Asia-Pacifi c, the Middle East and the Americas. Global oil demand in 2018 was 30% higher than it was in 2000, and natural gas demand increased even more dramatically by 60%. The expectation for this year was to get somewhere around 100 million barrels of oil per day, and it appears that we are for now within 1% of this target. But we haven’t seen yet the extent of the latest developments, such as the impact of COVID-19.

E&P: What are the emerging regions for oil and gas production that you believe will push the industry forward?

Beydoun: Regions like Africa, Asia-Pacific, the Middle East and the Americas have been quite successful in discovering big fields. Those places are opening new bases for exploration.

In 2020 there will be a 4% increase in capex investment in the upstream industry, which is about $219 billion. In terms of drilling wildcats in 2020, there are about 500 to 600 wildcats that are going to be completed worldwide. So it looks for now at least like 2020 is a slight upgrade to 2019 in terms of that kind of opportunity to discover, appraise, develop and produce for the industry. But again, this does not yet reflect the latest developments.

E&P: How does the industry work to alleviate concerns over climate change and serve as a positive voice in these conversations?

Beydoun: There are tangible efforts and engagement by the industry to address these concerns. Looking at these from three angles can help illustrate what actions are being taken. Firstly, from the IOGP’s perspective, we welcome the Paris Agreement and support the international community’s commitment to address the global challenge of climate change. We believe the oil and gas industry is part of the solution to this challenge. Secondly, as an industry, we need to demonstrate that we are working hard to reduce the emissions in our own operations and build more exposure to gas for power generation, with more oil for petrochemical feedstock because this demand is increasing. Lastly, building alliances among trade associations and professional societies, like IOGP, is key to making our voice heard and enabling more inclusive and coherent conversations with stakeholders.

E&P: What are some of the IOGP’s goals and recent accomplishments?

Beydoun: As the voice of the global upstream industry, the IOGP is unique in terms of associations. A lot of our recommended practices are coming from what we call the ‘sweat equity’ of our members who are contributing and bringing in their experts to arrive at these recommended practices. It can take years to develop these practices, and once we have one, the industry is willing to try to apply it, and that increases industrywide standardization. Because of our expertise, we also act as advisers to industry regulators and are in a position to share the benefit of our experience with them.

The IOGP’s Life-Saving Rules are a good recent example of how trade associations can support improvements in performance in critical areas across the industry. Companies derive significant benefit from this work, which can save lives. The nine rules protect workers in the industry all over the world. It’s important, because a high proportion of the industry’s workforce are contractors, and it’s widely recognized that having a standard set of rules across the industry makes a big difference to those who may work for multiple companies with different safety rules. The rules are designed for the front-line workforce and are based on analysis of data shared by IOGP members, which included details of thousands of incidents, many fatal, over 19 years. The data showed that by following these simple rules about 70% of these fatalities (more than 1,000) could have been prevented. The rules are available in 13 languages, and we have a short YouTube video on each one.

E&P: What are some of the IOGP’s priorities this year?

Beydoun: Our top priorities remain safety and the environment. In that vein, two big projects for this year are our analysis of the methods and requirements for recording methane emissions as well as a campaign on reducing driver fatigue.

Also, this year we are launching a few new joint industry projects. One of them is on environmental genomics research, which is aimed at exploring the application of environmental DNA-based analysis to enable more complete cost-effective and faster environmental assessment and monitoring of oil and gas operations. 

E&P: Since you were appointed as regional director last year, what have been some of your priorities and how have you put those into action?

Beydoun: My priorities are twofold. Firstly, share IOGP practices with the stakeholders in the Americas region, including associations and professional societies in the U.S. The second is to collaborate closely with some of these associations, starting with the API. We signed a memorandum of understanding with the API in June 2019 to work together and share our practices in the Americas region, like in Brazil, Argentina, Mexico, Colombia and Guyana. In these countries, we are jointly meeting with authorities and their respective national industry associations to establish a conversation on how to effectively use standards and best practices for improving safety, environmental and social performance. Building such alliances with other trade associations and professional societies not only aligns our individual messages but also enhances our collective credibility when sharing data and best practices.