Digitalization is a key part of the oil and gas industry’s response to the myriad challenges to current business models: lower oil prices and the global pandemic have complicated operations and pressure to decarbonize energy casts uncertainties over the future. Digitalization offers an opportunity to durably lower costs, more effectively deploy capital and anticipate changes in market dynamics.
Ironically, as the main commercial arena for geopolitical competition moves from control of physical resources to a struggle for dominance in the technology sphere, CPC continues to be buffeted. Data localization is a key area of regulation requiring data obtained in a country to be stored, processed and analyzed there. Varying data regulations and inconsistent operating agreements create a confusing jurisdictional landscape, driving the need for new systems to ensure compliance and efficiency. There is a broad spectrum of data restrictions impacting oil and gas CPC, ranging from less restrictive environments like the EU and US focused on protecting individual consumer data to more stringent regulations in China and Indonesia requiring highly specific data localization policies. Increased government attention to digital technologies and the data they generate is likely to create new data management costs. As CPC moves closer to the customer – either via entry into new markets such as electricity as part of a diversification strategy, or even by extending their value chains downstream from petrochemicals production to insights into consumer markets – the data collected to inform these decisions will be subject to a proliferation of new regulations. These will make moving or sharing data across borders more difficult, increase costs and potentially limit the strategic insights to be gained from the aggregation of market data. To counter these trends, and to safeguard against retroactive policies, there are some steps CPC can take. 1. From the outset, ensuring there is a rigorous control and cleaning process around data will help both with compliance and mitigation. An effective response begins with robust controls over the collection, cleaning and cataloging of data. 2. Regional and country-level set playbooks to implement can allow companies to both comply with local regulations, but also ensure the highest degree of data consolidation possible is achieved. 3. Planning ahead on potential contingencies by developing a global data framework that allows for regional- and country-specific differences from the global architecture in response to data sovereignty issues will facilitate consolidation to the fullest extent possible.