More than a year has passed since the first case of COVID-19 was reported. Time passes, but seemingly not for some sectors that continue to be affected by this crisis. However, these sectors do not lose faith and remain hopeful that the vaccine will pave the way for economic recovery. Nevertheless, as a result of the pandemic, several sectors and companies have accelerated their evolution, leading them to reinvent themselves faster to endure in a changing environment.

This scenario is the case for the oil and gas sector. The lack of mobility and the decrease in energy consumption has had a direct impact on oil demand. For example, the travel and hospitality industries have been among the hardest hit; hotel demand is down 42% month after month, with approximately 80% of rooms vacant. Moreover, estimations suggest that air travel demand dropped by 48% in 2020, with an expected loss of $300 billion. These declines impact the oil and gas sector because mobility has a direct effect on demand. As this reduction occurs, demand for hydrocarbons decreases worldwide. Consequently, we can see a drop in sales and price, making the oil industry one of the most affected.

Currently, the sector faces a price resurgence, and predictions estimate that oil price will rise to $80, or even $100 per barrel. However, this does not mean that oil prices will not decline again or that we will not face a similar or worse crisis in the future.

It is worth noting that the industry has faced significant declines in the past. McKinsey & Company highlighted in an article how the sector has long been affected, experiencing its third price collapse in 12 years. This phenomenon is also addressed in my blog, noting the constant fluctuation of the sector. By 2018, the oil industry’s market capitalization figure of listed companies worldwide fell from 10% to 6%.

Adapting business to reality

The low oil demand due to COVID-19 led many companies to take serious measures. Many have decided to reduce their operating and capital expenditures, suspend contracts and projects, and some have even decided to close their manufacturing facilities and services, putting the market on the back foot.

McKinsey & Company suggests that companies that will emerge from this crisis will be the ones that restructured their portfolios and product offerings and transformed their operating models.

And this is precisely what Nakasawa Resources has been doing since the beginning of the pandemic: we have adapted. We decided to focus on preserving the organization and embrace the remote-work style. We have embraced digitalization, which has allowed us to work more effectively with our team and evolve how we reach out to our potential and current customers globally.

Above all, efforts have focused on adjusting the service offering since this is the only way to cope with the pandemic’s impact. Nakasawa offers all its technological and manufacturing capabilities to the oil sector. Through our technology, we adapted to oil companies’ needs, and we reduced large investments made in the past by these companies.

Solutions that will strengthen the industry’s resilience

Just as we have transformed our business model, we provide producer companies with systems that help them become more resilient. Our Super Matroid Heater (SMH) and Super Matroid Cyclone (SMC) are Enhanced Oil Recovery Systems (EOR), and these are currently the best long-term investment offering.

According to a report published in Research Reports World, up to 70% of oil is currently being left behind in its place, presenting an opportunity for EOR systems growth. It also predicts that EOR techniques will increase substantially; the International Energy Agency (IEA) forecasts that energy demand will increase by 1.4% per year through 2040, with oil and natural gas contributing about half of the needs. Furthermore, the report highlights that there are already government programs that encourage the growth of this practice. For example, in India, as part of the “Energy Security” program, the government has set a target to reduce crude oil imports by 10% by 2022, with EOR emerging as an answer to this goal.

Companies must transition to new methods to optimize their oil recovery in the short and long term. At Nakasawa, we understand that to implement technological innovations, we must focus on the source of the problem, as well as comprehend the challenges of acquiring a new system amid a crisis. In response, we have adjusted our product portfolio by offering various service modalities to the customer. Options can range from customer purchase and installation of SMH-SMC systems to full financing by Nakasawa, including SMH or SMC installation, commissioning, and monitoring. In short, we offer the execution of the entire project at no cost and, Nakasawa would only charge from the moment the client’s well begins the recovering process.

We have been working and offering solutions like these in response to the pandemic to improve and optimize the existing processes within the oil industry. Producing companies, consumers, and companies like Nakasawa are all working to identify a formula that will benefit all of us and continue to respond to the high-energy demand while making the sector capable of meeting the challenges that lie ahead.

by info@nakasawaresources.com