Back in the early stages of the pandemic, a high-ranking executive at GALP told me the Portuguese company was positioning itself to become “the Amazon of Energy,” explaining that a fully digitalized operation and a diverse portfolio of products and services that extend well beyond GALP’s oil and gas roots would enable the company to thrive, even in the face of extreme disruption.

Now, more than 2 years later, the disruption in energy markets has indeed reached extreme levels due to the war in Ukraine, inflation, economic uncertainty, changing climate, the global push to decarbonize, and yes, even the remnants of the COVID-19 pandemic. All of which is testing the ability of oil, gas, and energy companies to respond to rapidly changing market signals and energy priorities.

Doing business in highly volatile market conditions has long been a strong suit for hydrocarbon-focused energy companies. Now, amid a unique confluence of factors, these companies are being asked to be more responsive, agile, and Amazon-like than they have ever been, with the ability to rapidly read the signals they’re getting from the market, from geopolitical forces and other sources, then respond, reprioritize, reallocate, and scale accordingly. That could mean producing and exporting more liquefied natural gas supplies for the European market to fill the void left by Russia, for example, or accelerating timelines for renewable energy production projects to reduce reliance on coal for electricity generation.

How can traditionally hydrocarbon-focused companies answer the call—and in doing so, take advantage of the opportunities that today’s unique market dynamics present? I see five keys to maintaining a high level of operational and supply chain readiness, without compromising near-term or long-term profitability.

1. Build a diverse portfolio of revenue streams that balances today’s realities with tomorrow’s priorities.

Traditional hydrocarbon-focused energy companies lately have been diversifying into new energy products and services, and new lines of business, as a hedge against volatile oil and gas prices, and as a means to meet longer-term carbon-reduction and ESG (environment, social, and governance) goals. At the same time, however, shifts in the short-term energy mix in Europe and elsewhere as a result of supply disruptions have returned the energy security issue to the front burner, providing a clear reminder of the vital role oil and gas will continue to play not just in the months ahead, but for the long term.

Strategically, the pursuit of lower-carbon revenue streams and the continued focus on hydrocarbon production aren’t mutually exclusive. Recent developments highlight how important it is for energy companies (and policymakers) to balance longer-term carbon-reduction goals with near-term energy market realities. At Shell, for example, near-term oil and natural gas production remains a top priority. Yet the company also is pressing forward with a plan to build a network of half a million electric vehicle charge points by 2025. Meanwhile, Occidental and its carbon-capture subsidiary 1PointFive plan to open what they tout as the world’s largest direct air capture plant in Texas by 2024, with the potential to build another 70 such plants worldwide by 2035. These are the types of markets energy companies could and should be exploring to increase their resilience, stability, and flexibility.

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