Sustainable energy transition with SAP solutions

The sector is grappling with a looming talent shortage. A significant portion of the current workforce is nearing retirement, and younger generations often find careers in the traditional oil and gas sector unappealing. This creates a critical need for upskilling the existing workforce in digital technologies and attracting new talent with expertise in areas like data science, automation, and sustainability. 

Aging legacy systems and infrastructure can create significant inefficiencies and safety risks. Digital transformation initiatives, while essential, often face barriers such as a high cost of technology, organizational resistance to change, and the complexity of managing and integrating vast amounts of data from global operations. 

A major challenge for companies in the oil, gas, and energy sector is modernizing the entire value chain while navigating market volatility, a global energy transition, and the pressing need for decarbonization. This requires managing the complexity of hydrocarbon supply and primary distribution while simultaneously optimizing secondary distribution and retail fuel network operations. Which can be quite challenging altogether.  

Complex, global supply chains are a major challenge for the energy sector. Companies are adopting new strategies and technologies to improve efficiency, reduce costs, and increase resilience against disruptions.  

The oil and gas industry is increasingly turning to technology to enhance efficiency and reduce costs. The global digital transformation market in the oil and gas sector is projected to grow by $56.4 billion from 2025 to 2029, at a compound annual growth rate (CAGR) of 14.5%. Technologies like AI, machine learning, and the Internet of Things (IoT) are at the forefront of this change.  

The industry faces a looming talent shortage due to an aging workforce and increasing competition from other sectors. In the United States alone, as many as 400,000 oil and gas employees are expected to retire within the next decade. At the same time, the percentage of employees with less than two years of tenure dropped significantly from 16% in 2012 to less than 4% in 2022. 

The global energy landscape is undergoing a significant shift from fossil fuels to low-carbon sources. In 2024, clean energy surpassed 40% of global electricity generation for the first time since the 1940s. Renewables, led by solar, added a record 858 TWh of generation, meeting three-quarters of the growth in electricity demand. Solar generation alone has doubled in the last three years, and its capacity installations set a new record in 2024, more than doubling the amount installed in 2022.  

The first major shift is a complete digital revolution. Tomorrow’s industry will be a data-driven ecosystem, where every asset, from the most remote offshore platform to the most intricate refinery, is a "digital twin." AI and machine learning will power real-time decision-making, optimizing everything from production and maintenance to logistics. This interconnected digital framework will predict equipment failures before they happen, automate complex processes, and provide an unprecedented level of efficiency, safety, and transparency. 

The industry's role in the energy transition will be redefined. Oil and gas companies will become leaders in developing and scaling up clean energy technologies. They will use their extensive engineering expertise to build infrastructure for carbon capture, utilization, and storage (CCUS) projects, enabling a circular carbon economy. The same companies will also be at the forefront of the hydrogen economy, using their existing infrastructure and expertise to produce, transport, and store clean hydrogen, providing crucial clean fuel for hard-to-abate sectors. 

The future of the sector is intrinsically linked to its ability to attract and retain the workforce of the future. The industry will actively overcome its talent shortage by repositioning itself as a high-tech, innovative, and purpose-driven career path. It will prioritize diversity, inclusion, and the development of a highly skilled workforce proficient in data science, AI, and robotics. This new generation of talent will not only manage traditional operations but also drive the development of sustainable solutions, ensuring the industry's long-term viability and positive impact on the world.