Published 27 September 2022

Energy transition leadership trends in oil and gas

Across many sectors, businesses continue to embrace the green energy transition, adopting clean energy practices and incorporating decarbonisation strategies into their operations. But an even bigger transformation is underway in the global energy sector, as oil and gas operators (and the businesses that support them), move away from fossil fuels, towards more sustainable energy sources and technologies.

Energy transition leadership trends in oil and gas

At a glance:

  • The green energy transition has now filtered down to mid-cap oil and gas operators, and the equipment, solutions and service providers that support this sector.
  • In response to this change, many small and medium businesses are appointing their first energy transition leadership roles.
  • Board Directors and senior executives are also increasingly combining existing roles to create new hybrid energy transition roles.

To deliver on the growing demand for energy transition expertise Kester Guy-Briscoe, a Principal for Gerard Daniels, supports the appointment of energy transition leaders to help businesses drive this change and navigate the complex issues it brings. Kester has spent the last five years building a growing pipeline of executive talent across the global energy supply chain, and continues to help candidates secure career-defining energy transition leadership opportunities.

Here are some of the recruitment and leadership trends that have emerged through this transition within (and around) oil and gas.

The ripple effect

While some of the larger organisations are better established in their own green energy transition, this process has now started to filter down to some of the smaller operators, and to the equipment, solutions and service providers that support oil and gas operators. According to Kester, this change has caused a surge in demand for energy transition leaders and other specialists in organisations that wouldn’t previously have given much thought to issues like green energy or decarbonisation.

“As most of the major operators diversify their operations to include renewables and low carbon energy projects, to continue supporting these industry leaders their suppliers must follow suit,” Kester says. “So as the energy transition matures, we are seeing a ripple effect across businesses in many affiliated industries.”

As one of the most advanced oil and gas operators in its energy transition, Equinor, provides a great example of this change. Ørsted (formerly Dong Energy) is another prominent example.

“Through my network, at engineering, drilling and other service providers that feed into companies like Equinor and Ørsted, I’ve seen the knock-on effect that change at the top of the energy market can have,” Kester explains. “By definition, these businesses have traditionally focused on developing their teams and expertise to deliver hydrocarbon projects, but to continue supporting energy sector clients like Equinor they are now restructuring their service offering, building new departments, expanding their product lines, and redesigning their manufacturing techniques to accommodate green energies and technologies.”

“To secure the leadership expertise they need to move through this transition and to deliver on this change, these businesses are increasingly turning to executive search firms,” he continues.

First time energy transition roles

For many of the larger suppliers to oil and gas operators, embracing the green energy transition has involved scaling up what was previously just a small part of their existing business. For smaller organisations, however, this transition requires a much more significant shift.

“For decades, business like GE allocated a proportionally small amount of their research and development (R&D) budget to support technologies like carbon capture, utilisation and storage. As the broader energy market has shifted its focus in this direction, these large service providers have been able to scale up their investment around relevant products and departments,” says Kester. “The technical expertise has always been there, but now they are having to go through the process of technology from concept to commercialisation”

“However, for the small and medium organisations, responding to the energy transition requires entirely new products and services to be created, and the formation of entirely new teams to lead this transition,” he continues. “This is where we are seeing the greatest change, and the emergence of first time energy transition leadership roles.”

It should also be noted that dedicated businesses at start-up / scale-up phase, looking at clean energy technology, have also existed throughout this time, and that individuals in these organisations now have an interesting choice. Remain where they are in roles with comparatively more autonomy, or join larger organisations where they can deploy their intellectual property in an environment with enormously more R&D spend, and potentially therefore a higher chance of commercialising their ideas at scale.

Hybrid energy transition roles

The growth in hybrid roles – like Director of Energy Transition and External Relationships, or Vice President of Energy Transition and Human Resources – is another interesting development that has recently emerged from the energy transition.

“What’s fascinating, is that some of the new positions that we are seeing at Board and Executive level are being offered to existing senior leaders as hybrid roles,” says Kester. “If there are no senior leaders with prior energy transition experience (which is common in oil and gas), creating a hybrid role allows these businesses to dip their toe into the water to build this focus, without the cost and risk of bringing in a new member of staff.”

According to Kester, a quid pro quo is also at play for leaders that take on hybrid energy transition roles.

“We know there is a strong appetite for energy transition experience without a clear pathway for individuals in the sector, and without the need for any prior experience these hybrid roles offer existing business leaders immense opportunity to up-skill and to expand their portfolio,” says Kester. “It’s also a great way for these leaders to secure a significant competitive advantage for the future.”

Can a drop in the bucket really affect change?

While the energy transition represents a genuine change for the oil and gas sector, investment into green projects and technologies still pales into insignificance compared to ongoing oil and gas exploration. But regardless of the scale of this investment, Kester counters that it still has a role to play in accelerating change, as illustrated by Aker BP’s recent acquisition of Lundin Energy’s exploration and production (E&P) business.

“Lundin’s E&P assets were purchased for approximately US$14bn,” Kester explains. “It’s unlikely that Aker BP would have paid as high a price, were it not for the fact that Lundin’s assets produce oil at one of the lowest production costs in the industry, and with operations electrified from onshore renewables projects also one of the lowest carbon intensive barrels too”.

“Regardless of the factors that drive the energy transition for individual businesses, there is now a significant intrinsic value linked to sustainable products, services and methods,” says Kester. “From a company value and brand point of view, investing in this transition at all levels within the energy sector will remain key to ongoing commercial success.”

Contact Kester to discuss your energy transition leadership needs, or connect with your local energy sector consulting team.

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