Why we will still need oil and gas in the future

• News & Highlights

Worldwide, total oil demand keeps growing. Low prices are fueling this trend. To remain competitive, oil companies need to reduce their production costs. Siemens is supporting their efforts with a comprehensive portfolio of products and services for electrification, compressors and rotating equipment, automation, and digitization along the entire production chain—from oil drilling to processing in refineries.

Oil prices have plummeted in the space of just a few months. In the summer of 2014 a barrel (159 liters) of "black gold" cost over $100. In January 2016 a barrel cost less than $40.

What happened? On the one hand, more oil had reached the market; on the other, demand had decreased. It was not the first time oil prices took a hit. They have always been volatile, but even more so during the past decade, explains Lisa Davis, the member of the Siemens Managing Board who is responsible for Siemens' power businesses, in particular the oil and gas business.

The low price of oil is both a challenge and an opportunity for the industry. Well-run oil and gas (O&G) companies that are strong today are likely to emerge even stronger after prices rebound. While the availability of oil fields and the associated equipment is always paramount for them, during a slump they have every reason to also focus on cost-effective production. Often this means bringing in new technologies and further improving processes.