Many have spoken about the energy transition, but few talk about what it will take to accomplish it. Never have the issues of energy security, energy transition, and energy efficiency been as closely intertwined as they are today. With production cuts, price hikes, and global inflation creating a tumultuous global economy and an atmosphere of uncertainty within energy markets around the world, nothing better can remedy economic volatility than increased investment.
Recent years have witnessed the outbreak of the first major European war since World War II and the endurance of energy markets has been pushed to its ultimate limits, with skyrocketing global price hikes only being alleviated by frequent and widespread interest rate hikes. But this is nothing more than an economic painkiller that central banks have employed as a temporary solution. It is conclusive that ensuring energy security through the stabilization of oil and gas markets is the only way to remedy the current turbulence that markets are experiencing. Energy security has become a priority for energy experts who insist that markets will not be out of the woods until there are guarantees on the sustainability of global petroleum supplies through increasing investments in production.
Effectively fitting digitalization within energy investment mechanisms can substantially increase the volume of investments in the global oil and gas industry. Digital solutions have demonstrated that they have the potential to streamline the entire oil and gas investment process.
With Egypt being a trendsetter, the Egypt Upstream Gateway (EUG) is an ideal platform that makes all the required data that investors need to make an informed investment decision easily available, accessible, and understandable. Through this, Egypt has successfully been promoting investments in its oil and gas assets through organizing bid rounds. As one of the first countries to use digital platforms to promote investment opportunities, EUG has successfully created an investment climate that upholds transparency is what can lure the key funding the opportunities that every sector needs to build the momentum for growth. Seeing the success that EUG has enjoyed, many other countries are following similar trends and are expected to try to emulate the model that Egypt has put in place to secure investments using effective and informative digital platforms.
Turning data into more than just a program, but a tool that thinks for itself will always have numerous economic benefits in creating an influx of investments. In the investment scenery in the energy sector, AI is yet to take its effect in attracting the attention of potential investments. “The most recent innovation in the world of investing is Robo-advisory which is aimed at automating the entire investment advisory process by replacing human intervention. Transparency and error-free unbiased advisory are the hallmarks of Robo-investing. An ideal Robo-advisor not only calculates the amount you need to invest for a financial goal but also decides the asset allocation and investment products for you. Further, it also guides you about the entry into or exit from a particular stock or fund at the appropriate time, unaffected by emotions attached with investment decision making,” says Rahul Jain in his article titled “Digitizing has led to an increase in investments”.
Not only are there promising economic outlooks with the introduction of AI into energy investment mechanisms, but there are also prospects that smaller investors will have the opportunity to take part in the action. Crowdfunding could become a source of investments that could empower the oil and gas industry as well as open the door for “the small guy” to play a role in a field that is sometimes widely perceived to be exclusive to big investors. It could be part of an economic strategy that could make investing in oil and gas more inclusive, in addition to substantially increasing the volume of investments.
“Unlike the [traditional] methods, oil crowdfunding platforms provide smaller operators with a turnkey platform that puts the fundraising process on autopilot and requires smaller operators to use very few internal resources,” said Financial Strategist Nick Perzhanovskiy in his article titled ‘How Viable is Crowdfunding for the Oil and Gas Industry?’
Perzhanovskiy added, “Crowdfunding creates room for more participants in the investment pool and facilitates some investment procedures. As a result, all investment dollars poured earlier into administrative tasks, now work for project development and scaling up.”
Digitalization has not only played a role in simplifying investment mechanisms, but its general role in improving the overall performance of global energy markets has been remarkable. The incorporation of advanced technological solutions and AI into the operations of any energy market goes beyond just being a means for improving energy efficiency. It creates an environment where the investor has a user-friendly to access all the data that they need to make a well-informed decision in a market that is transparent and dedicated to ensure that he/she will get their money’s worth.