The views expressed by the author are their own and do not represent the views of Energy Workforce & Technology Council.
As we enter 2025, the oil and gas industry is at a critical juncture. The past year has been marked by a complex interplay of controlled OPEC+ supply, variable demand, and geopolitical tensions. Despite these challenges, the industry has shown remarkable resilience, reflected in the stability of oil prices and robust financial performance. As we look ahead, several key trends are poised to shape the industry’s trajectory, driving growth and innovation.
The Permian Basin: Repositioning for Growth
The Permian Basin remains vital to US oil and gas production, contributing significantly to the domestic crude oil and natural gas output. However, the region faces challenges related to natural gas takeaway capacity and infrastructure constraints, resulting in negative natural gas prices at the Waha hub.[1] The recent completion of the Matterhorn Express Pipeline and other upcoming projects are expected to alleviate some of these bottlenecks, supporting stable production and reducing price volatility.[2]
Moreover, some companies are exploring tier 2 and tier 3 acreage to help offset flattening production from tier 1 acreage. Adopting new refracturing, enhanced oil recovery, and innovative completion techniques can enhance capital returns and well productivity. Meanwhile, significant mergers and acquisitions (M&A) have led to consolidation of upstream players in the Permian basin.[3] Consolidating acquired assets and leveraging investments in new technologies, will likely support the profitable growth strategy of Permian majors in 2025.
Oilfield Services: Emerging from the Shadows
The oilfield services sector is witnessing a turnaround. Innovation and cost-reduction measures have helped the sector’s net income exceed US$50 billion in the last three years.[4] Some oilfield service companies are increasingly leveraging digital capabilities to provide high-margin and lower-carbon solutions as they continue building niche capabilities, diversifying portfolios, and expanding their customer base. This emergence into “energy technology companies” is helping decouple their business from the energy industry’s cyclicality.
In fact, some oilfield services companies are developing solutions focused on electrification, carbon capture, and hydrogen generation.[5] For example, Schlumberger and Baker Hughes are collaborating with Genvia and Air Products, respectively, to create new solutions for producing clean hydrogen.[6] These initiatives are expected to drive long-term growth and position oilfield services companies as key players in the transition to new energy technologies. Considering large upstream customers have completed mega-mergers in the Permian region in 2023 and 2024 and will require scalable and tech-powered oilfield services, many small-sized OFS companies could seek exits at favorable valuations, spurring consolidation across the sector.
National Oil Companies: Breaking Barriers
National oil companies (NOCs), particularly in the Middle East, are navigating a different ecosystem that can help them to innovate and adapt rapidly. These companies are investing in boosting their hydrocarbon production capacity while also developing associated midstream and downstream infrastructure. ADNOC, for example, has set a target to increase crude oil production capacity from the current 3 MMbbl/d to 5 MMbbl/d by 2027, moving up its earlier 2030 target by three years.[7] Meanwhile, Saudi Aramco and ADNOC are investing in mega refining-chemical-low-carbon integrated projects, partnering with technology firms to boost their digital capabilities, and adopting more customer-centric strategies in their operations.[8]
Moreover, NOCs are scaling low-carbon technologies such as hydrogen and carbon capture, utilization, and storage. For instance, the United Arab Emirates aims to produce 1.4 million tons of green and blue hydrogen annually by 2031, while Qatar plans to build the world’s largest blue ammonia plant by 2026.[9] Put simply, NOCs appear poised not only to support the growth in global energy demand but also to lead the charge in scaling new technologies over the next few years.
Refining and Marketing: Navigating Under Uncertainty
The refining and marketing sector is facing some challenges due to modest growth in traditional fuels and profitability issues in both traditional and renewable segments. To enhance resilience and create value, refiners could focus on optimizing hydrocarbon value chains and integrating low-carbon technologies by leveraging digital tools and forming cross-industry partnerships. For example, some downstream companies, such as Chevron and Marathon Petroleum Corporation, have formed partnerships with agricultural firms—Chevron with Corteva and Bunge and Marathon with ADM. These collaborations can help secure a consistent feedstock supply and strengthen their biofuel supply chains.[10] Policy support, such as sustainable aviation fuel mandates, also remains important for helping to stimulate demand for low-carbon fuels and driving sector growth.
Additionally, digital technologies can significantly improve efficiency and customer engagement. Innovations like connected car payment solutions and smart fuel management systems can create new revenue streams and cost synergies. By embracing these digital advancements, refiners can streamline operations and enhance their competitive edge in a rapidly evolving market.
Global Energy Policies: Government Priorities to Come into Play
More than 95 countries are expected to hold national elections in 2024 and 2025, and these election outcomes could likely shape the policy approaches to fossil fuels and low-carbon alternatives..[11]
President-elect Trump’s energy priorities include energy independence and lowering energy costs. His proposals seek to increase production of oil and gas, in addition to other energy sources such as nuclear.[12] Some steps the next administration has discussed include measures to streamline permitting and expedite environmental approvals, in addition to lifting the Biden administration’s pause on new liquified natural gas export permits.[13]
Energy policies in some advanced economies are increasingly geared toward creating demand for new low-carbon technologies, while many emerging economies are implementing policies to address both demand and supply to develop comprehensive energy solutions. As a result, energy regulations are increasingly looking at the whole energy basket in totality rather than favoring one energy source over another.
Conclusion
As we move into 2025, the oil and gas industry is poised for a transformative year. The following three themes are expected to play out next year:
- The oil and gas industry will likely continue leveraging digital technologies and M&A activities to help enhance operational efficiency and achieve economies of scale for sustainable growth.
- Investments in scalable and commercial low-carbon solutions are anticipated to increase as companies focus on profitable growth
- With oil prices projected to remain range-bound amid a cautiously optimistic investment environment, oil and gas companies are expected to prioritize strategic capital allocation and maintain capital discipline to balance growth and shareholder focus.[14]
By embracing digital innovation, strategic consolidation, and low-carbon solutions, companies will likely navigate the complexities of the market and drive sustainable growth in 2025.
By: Rick Carr, John England, Kate Hardin, and Anshu Mittal
This article contains general information only, and Deloitte is not, by means of this article, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this article.
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[1] Blum et al., The Basin Book; Chris Newman, “Natural gas prices to hover around $2 this fall as output remains flat, EIA says,” Natural Gas Intelligence, Sept. 10, 2024.
[2] US EIA, “Natural gas pipeline capacity from the Permian Basin is set to increase,” Sept. 10, 2024.
[3] Deloitte analysis based on data sourced from Enverus, accessed September 2024.
[4] Deloitte analysis of data sourced from S&P Capital IQ.
[5] SLB, “SLB OneSubsea awarded contract by Equinor for groundbreaking all-electric subsea project,” press release, June 27, 2024; Baker Hughes, “Air Products and Baker Hughes to collaborate on global hydrogen projects,” press release, June 9, 2021; Baker Hughes earnings call transcript, accessed via AlphaSense database.
[6] SLB, “Schlumberger New Energy, the CEA and partners announce European Commission approval for the formation of Genvia, a clean hydrogen production technology venture,” press release, Jan. 11, 2021; Baker Hughes, “Air Products and Baker Hughes to collaborate on global hydrogen projects,” press release, June 9, 2021.
[7] ADNOC, “Responsible growth,” accessed Nov. 22, 2024.
[8] Marwa Rashad, “Exclusive: Saudi Aramco, UAE’s ADNOC in talks to invest in US LNG projects, sources say,” Reuters, March 6, 2024; Aramco Digital, “Saudi Aramco president and CEO Amin Nasser launches Aramco Digital, a new initiative in digital transformation,” press release, Jan. 30, 2024; Charlotte Trueman, “Aramco Digital announces partnerships to boost AI and wireless technologies in Saudi Arabia,” Data Center Dynamics, Sept. 14, 2024.
[9] The Government of the United Arab Emirates, “National hydrogen strategy,” accessed Nov. 22, 2024; International Energy Agency, “World energy outlook 2024,” accessed Nov. 22, 2024; Heba Hashem, “Region’s green hydrogen obsession here to stay,” Breakbulk Magazine, no. 1 (2024).
[10] Chevron Corporation, “Corteva agriscience, Bunge and Chevron announce collaboration to produce winter canola to meet growing demand for lower carbon renewable fuels,” press release, accessed Nov. 22, 2024; Marathon Petroleum Corporation, ADM, Marathon Petroleum Corp. take next step in meeting demand for renewable fuels as Green Bison Production Facility begins operations,” press release, accessed Nov. 22, 2023.
[11] The Brookings Institution, “The 2024 US presidential election and the future of multilateralism,” Sept. 24, 2024; Wikipedia, “List of elections in 2024, 2025,” accessed November 2024.
[12] Donaldjtrump.com, “Agenda47: America must have the #1 lowest cost energy and electricity on Earth,” Sept. 7, 2023.
[13] Simon Flowers, “A second Trump administration,” Wood Mackenzie, Nov. 7, 2024.
[14] Fitch Ratings, “Higher geopolitical risk premium in oil price partly offsetting market weakness,” Oct. 10, 2024.
