ARTICLE | MARCH, 5

Energy: profitability vs. competitiveness

By Federico Hardziej

In the dynamic landscape of the energy industry, appearances can be deceiving. A personal experience taught me a valuable lesson about the difference between profitability and competitiveness.

A few years ago, I visited a potential client who proudly told me they had just received a payment of USD 500k above the estimated amount. Almost jokingly, I asked, “What if the project was worth USD 1M and this payment only represented 50%?”

That exchange taught me that, while we may appear profitable, true competitiveness lies in seeing the bigger picture. It reminds me of the importance of not getting carried away by isolated figures but considering each operation’s real and sustainable value.

Competitiveness = efficient + attractive solutions

The energy industry is profitable, mainly due to current favorable market conditions. However, profitability doesn’t always mean competitiveness.

Competitiveness requires solutions that are efficient and attractive at the same time. This is the real challenge for the companies in this sector. A context of robust profit margins is the best moment for companies to invest in optimizing their operations.

Efficiency is not just about doing more with less; It’s also about identifying potential future pain points. In these boom times, we must watch our pennies and our major investments. Because, in the end, big money tends to take care of itself.

Here are two examples of efficient and attractive solutions:

Predictive maintenance analysis: Implementing AI-powered predictive analysis systems to anticipate failures in critical equipment (pumps, compressors, pipelines) to reduce unplanned downtime, which can cost thousands of dollars per hour in lost production.
Actionable insights from IoT: Installing IoT sensors to monitor variables like pressure, temperature, and vibration in real time is not enough. Data must be systematized with a solid infrastructure and solutions such as data lakes to organize, analyze, and detect anomalies, monitor equipment, and provide rapid response. Additionally, integrating AI assistants allows non-technical users to access this information using natural language.

Being an attractive company goes beyond profitability; it is about building a strong ecosystem that creates value.

Added value for people: This means offering sustainable growth opportunities and solid long-term management. Data analytics platforms enable decision-makers to access real-time information on production, costs, and performance. Machine learning algorithms can also help identify hidden patterns and trends within the data.
Environmental sustainability: This involves adopting responsible practices that minimize ecological impact and address the demands of an increasingly environmentally aware society. Data analytics can optimize energy and water usage in operations.
Dynamic and enriching work environment: Innovation, continuous training in emerging technologies such as AI, data analytics, and robotics, and employee well-being are essential pillars that drive engagement and development.

Collaborating to reduce OPEX as a competitive strategy

A great opportunity for companies in the energy sector is working together to find innovative ways to reduce operational expenses (OPEX). However, this approach is not just about cutting costs; it involves sharing best practices, adopting proven technologies, and developing joint solutions that enhance process efficiency.

Through collaboration, companies not only streamline their operations but also strengthen the entire ecosystem, making the industry more resilient and attractive over time.

Competitiveness does not emerge on its own. We must leverage innovation, which rests on three fundamental pillars: technology, processes, and culture.

Technology, led by artificial intelligence (AI), should not be a mystery. Today, we have accessible tools that facilitate digital transformation and offer practical solutions to reshape current business models. It’s less about reinventing the wheel and more about leveraging AI to simplify technology adoption, enhance decision-making, and improve operational efficiency.

Finally, while digital transformation is a crucial starting point, it is not enough. This is not merely a change in tools but a profound transformation in how business is conducted; its true value lies in strategic implementation. Solutions like data lakes, workflow optimization, and AI assistants are key to optimizing OPEX. We understand that being agile is essential in this sector. If any of these ideas resonate with your objectives, we would love to discuss how you envision the future of your operations and the initiatives needed to bring that vision to reality.

Get in touch!