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SaaS, the golden service for oil & gas

Whilst digitalization investments from the upstream sector range from collaborative work to the pursuit of new sources of information and technologies, the infrastructure sector has still remained attached to its old school technologies. Such resistance to change have therefore​ crippled the field or better, it has shaped and prepared the market for an extensive disruption by innovative enterprises. SaaS provides an excellent opportunity for market improvement, it is also an amazing investment for O&G - a huge market with the right numbers.

Opportunities to save money.

The well established global O&G market, which is estimated to be US$ 1.1 trillion/year (accounting extraction, transport, refining, and construction of fossil fuel-fired power plants), is currently weakened by a multitude of issues that can be easily solved by computers. A report from the global management consultancy McKinsey & Company released in March 2016 suggested that about US$ 20 billion could be saved in the supply chain considering the 20 biggest companies worldwide. The number of designs, procurement and operational processes can be as high as thousands of millions. That is more than what an average O&G workforce team can handle, and is prone to human error, but not for machines. Computers are able to save US$700,000 per new drilling well by increasing procurement processes efficiency. So if a particular company has 1,300 wells to be constructed, a number close to US$ 1 billion could be saved, and partially expended elsewhere, on the long run just for a single big company. Considering there are over 400 locations for exploration and production, a lot is yet to be spent and saved. And this is only talking about the big fishes.

US$ 20 billion could be saved in the supply chain just from the 20 biggest companies worldwide. (McKinsey & Company, A billion-dollar digital opportunity for oil companies).

How big is the market?

Yet, a share of $700 billion/year of the global O&G market is invested solely in upstream oil and gas. According to IEA forecasts, this number is expected to rise to US$850 billion/year. Although price drops are hindering O&G industry, the world’s energy demand is growing, and investments in the energy supply chain are and will be necessary for the next two decades. IEA’s prediction is that US$40 trillion will be invested (cumulatively) for the expansion supply chain until 2035, US$11 trillion just for upstream O&G.

In the global O&G upstream sector, small and medium enterprises compose a large size of the market being the biggest niche in the sector. Assuming that a web 2.0 technology which increases the efficiency of procurements, contracts, quality products, and on-time deliveries for projects and equipment could save up to 1%, it could save up to US$ 70, or US$ 85 billion/year if forecasts are right.

If partnerships or niche extensions are considered, an even bigger market is unlocked for web 2.0 technologies. For example, by adding renewable energy, another US$100 billion/year will be available at least up until 2020 due to countries’ commitment after COP21.

DeepStream is dedicated to amending the supply chain’s pains in the huge Oil & Gas infrastructure market.

Written by Lígia Alencar

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