Capacity building is a critical component for introducing many different innovations and is an essential prerequisite for introducing a digital infrastructure to any properly functioning economic system, most notably the oil and gas sector. Though experts agree that digitalization to ensure the oil and gas market’s competitiveness within the global economy, funding and investing in the necessary capacity-building initiatives to enable digital transformation is a detail that is often overlooked.
Experts can agree that capacity-building measures are well worth the investment, particularly in the oil and gas industry. Many academic studies have been conducted to reinforce this economic argument. “The demand for a digitally competent population and workforce has become even more critical. A multi-disciplinary approach should be taken in developing the capacity-building strategy to increase learners’ strengths and address gaps in their knowledge in areas such as technical skills, service design, ethics, creative problem solving, regulation of technologies, legislation, and digital transformation as a whole,” said a study titled ‘Capacity building as an important key aspect to supporting countries’ digitalization endeavors’ by Ingrid Pappel, Josephine Lusi, Nora Hauptmann, Valentina Stadnic, Margus Mägi, Diana Sang, Sherman Kong.
Having the right strategy with adequate financing is pivotal for achieving the desired result, especially within the context of the oil and gas industry. Proper and adequate investments in capacity can create a workforce that is mentally well-equipped and fit to generate creative solutions to complex problems. “The capacity building strategy for a country’s digitalization should enhance understanding of public service design through the use of new technologies. Through understanding co-creation, the design process, creative problem solving, a human-centric approach in public services, and prototyping, learners should be equipped to apply new ways to design and implement services along with the new technologies and process re-design. It is also crucial to continuously monitor industry trends and emerging technologies to sustain a digital society. Hence, establishing a digital talent archive that guarantees the continuous sustainability of a country’s capacity is imperative.”
Egypt is one case study that can be used in effectively channeling investments toward capacity-building preparations for digitalization. Apache, for example, is one of the largest US-based energy companies operating in the Egyptian oil and gas market with up to $1.4 billion to be invested in 2024 alone. As a company that focuses a lot on digitalization, it also invests heavily in capacity building.
Moreover, it’s important to note that the equation in more ways than one is always flipped and can go both ways. Rather than investments in capacity building being a necessity for digitalization to be a success, economic policies also need to emphasize that investments are needed for digitalization for effective capacity building to be successful.
Now, on-site workers can use digital twins as a useful training tool. When VR technology is combined with a digital duplicate of a sophisticated oil refinery, for instance, workers can train and enhance their abilities in a realistic setting. This contributes to improving safety procedures and the general caliber of goods and operations, thereby playing a significant role in asset maintenance and security.
On a global scale (particularly in oil and gas), training and industrial maintenance are the two essential areas where augmented and virtual reality (AR/VR) are anticipated to attract the most investments in 2024, with forecasts of up to $4.1 billion in investments in each of these areas. The three main consumer use cases for augmented and virtual reality (AR/VR) are VR gaming, VR video/feature viewing, and AR gaming. It is anticipated that almost $18 billion will be spent on AR/VR products by 2024.
Apart from artificial intelligence and machine learning, one of the most disruptive digital transformation technologies in the oil sector is the Internet of Things (IoT), which is expected to play a big role in training employees and have an economic impact of $930 billion for the next decade.
As investors keep track of the market for lucrative opportunities, many have prioritized that their money should go into capacity building to lay the foundations for a digitalized future and some say that direct investments into digitalization itself will result in better capacity building. Yet, in many ways, the decision as to whether one should invest in one or the other is similar to the chicken or egg question. In reality, it depends on the needs of an individual market and how acquainted its workforce maybe with digital technologies. Nonetheless, for these initiatives to have any effect on the ground, there needs the necessary expertise and financing, which is the main reason obstacles to foreign investments around the world should be eliminated. This is the most effective strategy for the foreseeable future.
