From the Chief Executive: August 2020

The rapid global spread of COVID-19 has eclipsed other recent epidemics and market crises in both size and scope. In addition to the deadly human toll and the disruption to millions of people’s lives, the economic damage is already significant and far-reaching. The bad news is that health professionals predict the disease will be around for a while.

Business leaders face huge uncertainty about the future, including how to find their next new customers during lockdown while watching their backlog disappear. With social distancing and travel restrictions, the old business development culture – lots of international travel, face-to-face meetings, social time to build trust, and chance encounters at events – no longer applies.

For many businesses, there is a sense of waiting for something to change, rather than making decisions on what to do next and how to invest the limited resources and money available. Why wait? It is time to adapt and stop waiting for a return to normal. The new normal may not be the same for everybody, but there are decisions that business leaders can make now.

Take advantage of the uncertainty and unprecedented trading conditions and be a first mover by adopting innovative business models and safe ways of meeting people.

Target key export markets and recruit local representatives, so your staff no longer need to travel. Not only will you cut travel costs but you’ll reduce emissions too, contributing to your net-zero carbon plans.

Even with air bridges, some clients may still be nervous about meeting new people, especially if you are travelling in from a high-risk country. Don’t embarrass them into face-to-face meetings – instead, partner with organisations such as EIC that have proven online matchmaking capabilities and platforms for such instances. If one-on-one sessions are essential, take the lead and find a safe, neutral place to meet. And make sure you don’t commit the COVID-19 cultural mistake of slipping into old habits and reaching out for a handshake, inadvertently damaging trust.

Companies are increasingly diversifying beyond oil and gas into renewables, and interestingly into non-energy sectors much more. However, 90% of businesses are still reliant on oil and gas revenues, and they have to prepare for ‘lower for longer’ once again, with oil prices expected to stay in the +/- US$40 range for the foreseeable future. If prices creep up to US$50, US shale is expected to scale up quickly, leading to over-supply and oil price reduction again.

It is important, therefore, that businesses in the CAPEX space focus on the projects and countries that have the lowest cost of production, in order to maximise profitability.

If you are in the renewables market, for example, the impact of Brexit could be negative because the largest number of offshore wind projects are still projected to be in Europe. A no-deal or bad deal outcome will slow down transactions and make import and export with Europe more expensive. You should, therefore, refamiliarise yourself with Brexit and assess the risks to your business.

For most office-based businesses, there has been a perspective shift in the effectiveness of working from home. A growing number of companies are closing their excess office space permanently and redirecting saved costs to business development and R&D. Provide safe meeting and networking spaces for your staff, and where offices are needed, design them to be lower cost, flexible and above all, safe.

External events will look drastically different. Limited numbers are to be expected, either by design or through a lack of people willing to attend large gatherings. Organisers should enable one-way routes, offer safe 1-2-1 meeting zones, employ hygienists rather than baristas, and embrace hybrid models combining virtual and smaller, lower-cost physical meeting spaces.

If you have a digital product, adapt now to take advantage of the current pandemic. COVID-19 has shifted digitalisation from a ‘nice-to-have’ to a ‘must-have’ with the need for businesses to operate energy facilities remotely, and is now on the desks of CEOs and heads of health and safety.

COP26 is now taking place in November 2021, when the UK government will host more than 100 heads of state in Glasgow. Policymakers, investors and business owners will face significant challenges during the coming months – how to balance the potentially conflicting requirements of developing a green economy, centred on new energy transition technologies, while funding the high costs of adapting to the new normal of life with COVID-19.

These are strange times indeed, presenting unprecedented challenges for some and potentially huge opportunities for others.   Stuart Broadley Chief Executive Officer, Energy Industries Council stuart.broadley@the-eic.com