As recent studies show, China will unlikely surpass leading oil exporters like US, Russia and Saudi Arabia. But with new technologies like AI implemented China has its whole potential to disrupt the global energy market enough to undermine major exporters position.
Digitalisation is inevitable for O&G companies to be competitive and challenging for the market structure. We can already see obvious leaders of this trend. As Zyfra earlier research showed China is occupying second place after the US in terms of AI development, while taking the first in capitals and monetization. Some 48 percent of all AI venture funding globally went to China. Businesses and government have collaborated on a sweeping plan to make China the world’s primary A.I. innovation center by 2030.
Speaking about petro industry. APAC is by far the largest region in terms of global refining capacity, with China accounting for approximately 12% of global capacity in 2018. In nearest 5 years to come, growth will be driven by projects in China and India to meet rising oil product demand from the growing economies.
US capacity has remained stable last year, with no major new refineries, even taking into account recent shale boom, while ageing facilities in Western Europe and Russia have faced tougher competition from newer and more complex facilities in APAC and the Middle East which are able to process lower quality, and thus cheaper, feedstocks.
By now the primary motivation for investment in digital for O&G is to improve efficiency. According to Gartner, the “smart oil deposit” concept development could help oil companies to cut cost by 5% and to enhance production volume by 2%. CERA, accounts “smart oil and gas deposit” to cut production cost by 1–6%, while shrinking oil-well downtime by – 1–4% and to lower labor intensity up to 25%.
Chinese petro-giants have already annouced a number of projects in “smart” concept. China’s CNOOC has signed a production sharing contract (PSC) with Roc Oil and Smart Oil for Weizhou 10-3W oilfield and Block 22/04 (contract area) in the South China Sea.
In a bid to align with smart shipping and innovation, Dalian Shipbuilding Industry Co (DSIC) is currently developing China’s first smart crude oil carrier, that will be designed to incorporate technology to assist the captain in operation.
Last year Huawei has also announced it will manufacture the MEC network system for the Ningbo Zhenhai smart refinery. The smart industrial facility venture is a noteworthy stride in the undertaking data improvement.
Moreover, China welcomed numerous world leading digital companies to create for its petro-industry among them are Wison Engineering Ltd, Honeywell, Zyfra Group.
In fact, global GDP is set to increase by 14 percent because of AI, according to PwC. The tech’s deployment in the decade ahead will add $15.7 trillion to global GDP, with China predicted to take $7 trillion and North America $3.7 trillion, according to the multinational company.
When AI proceeds to actual application, China will benefit from its engineers, entrepreneurs as well as foreign and vast domestic market. The US has shared almost all of its top AI research with Canada and the UK, but China has the advantages that can enable it to eventually leapfrog them.
Being a major world energy consumer, Chinese approach towards digitalization of the industry could dramatically undermine positions of those current leaders, who will fail to catch-up with digital technologies in just nearest 5 years to come. The overall interdependency and oil prices determined by demand coul shake up the traditional energy exporters hierarchy.
Source: Opinion Article by Mr. Dmitry Lukovkin, ZYFRA’s AI Business Director