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The oil and gas industry has been experiencing a crisis due to the COVID-19 pandemic. The industry is currently facing its third price collapse in 12 years, which is different from the previous two shocks. This time, the industry is experiencing a supply shock with an unprecedented demand drop and a global humanitarian crisis. The current context combines a supply shock with an unprecedented demand drop and a global humanitarian crisis. Additionally, the sector’s financial and structural health is worse than in previous crises. The advent of shale, excessive supply, and generous financial markets that overlooked the limited capital discipline have all contributed to poor returns.

According to the World Bank, energy prices are expected to stabilize below pre-pandemic levels next year, despite some recovery. The COVID-19 crisis has accelerated what was already shaping up to be one of the industry’s most transformative moments. While the depth and duration of this crisis are uncertain, our research suggests that without fundamental change, it will be difficult to return to the attractive industry performance that has historically prevailed.

The oil and gas industry will need to dig deep and tap its proud history of bold structural moves, innovation, and safe and profitable operations in the toughest conditions to change the current paradigm. Companies that don’t will restructure or inevitably atrophy.