NEORIS LATAM – ENRIQUE MALLEA (2021 Trends in the energy sector)

Technology leads to operational efficiency in the energy sector

During these times it would seem every opinion piece on any industry should begin by saying “Due to the pandemic…”. In the business consulting world, we have all become amateur futurologists and epidemiologists as the companies we advise are impacted by the advances, setbacks and mutations of the Coronavirus. However, little has been said about how this paradigm shift is transforming the energy sector, which together with the telecommunications sector, is society’s most important industry to sustain the quarantines and isolation necessary to survive this global challenge.

Digital transformation of the industry: the key to survival

In 2020, price volatility and the weakness of global demand provoked an 18% fall in sector investment, according to the IEA (International Energy Agency). Energy businesses need to lower their OPEX, reducing or making more efficient the performance of their assets and adjust their production according to demand flows. Abrupt changes in economic scenarios require adjustment measures, restructurings, mergers and other actions, provoking disinvestment and loss of value for companies.

Faced with these changes, companies in the energy sector need to incorporate OT (Operation Technologies) into their businesses along with the inclusion of innovative practices that generate shortcuts, efficiencies and changes in operating models. The energy industry is more accustomed to investing in traditional physical infrastructure, oversized distribution networks, underutilized equipment with downtime, etc., all of which generate high fixed costs and operating expenses.

My appointment at NEORIS is framed by a need to guide the sector and offer solutions that will demonstrate true change. My 25-year-long professional career as an executive and leader of international energy sector companies allows me to bring to the table an insider perspective on an industry of high technical complexity that often faces challenges when adopting new technologies. Oil and gas production fields as well as energy processing and distribution systems must be handled with scientific-grade care and precision. Changing software or incorporating new technology can lead to uncoordinated inefficiencies, multi-million-dollar outages, or severe accidents for operators.

For this reason, I am excited to be the new Energy Sector Ambassador for NEORIS, a position from which I can bring these two worlds closer together and help in the generation and implementation of the technologies that are needed to transform the industry. The pandemic presents us with a renewed need to introduce new efficiencies: Companies that invested significantly in digital technologies saw production improvements of between 2% -10%, and cost reductions of between 10% -30%, according to a study by McKinsey. These assured returns provide a much-needed guiding hand in the face of so much uncertainty.

Agile decisions keep companies afloat

The integration of digital processes into operations enables fundamental processes such as the predictive maintenance of machinery, remote monitoring of field operations, the collection and standardization of data with instant, reliable, and easily accessible information on modern intelligent digital platforms. This transformation is then complemented with the incorporation of AI (Artificial Intelligence) that can use and coordinate these various tools to help make business decisions in which delays or the inability to act agilely can trigger logistics nightmares or significant hidden costs. With so many new operational, labor and health processes that this new reality has generated for this sector, society's expectations regarding its efficiency and its companies are increasing. These expectations and demands are stronger than ever.

At NEORIS we guide companies with a realistic business vision of their digitization process, transforming operational activities and implementing tools that allow them to achieve the highest level of excellence and efficiency. The solutions must not only take into account isolated problems with specific digital tools. The transformation must also provide measures that readjust workflows in a coordinated way and reinvent operating models, allowing us to anticipate any scenario that tomorrow may bring.

Last year has given us a task as exciting as it is challenging: guiding companies to find their place in a world that has been completely transformed. I am honored to be a part of this collective effort and I look forward to contributing with solutions that help the energy sector continue to be the engine of change and evolution for our society.

ENRIQUE MALLEA

Global Ambassador for NEORIS Energy