Strategies for Service Providers in the Pandemic Era
The oil and gas industry has taken a beating in the last year. After Covid-related travel restrictions saw fuel consumption plummet and a price war between Saudi Arabia and Russia, the oil and gas industry was brought to its knees. In response, oil companies slashed CapEx spending and prepared to sit tight. With a strategy to spend as little money as possible during the crisis, the status quo will remain: Dated and fully depreciated, if not technically outdated VSAT networks will strain and fail to support data rate demands of today’s digital world, most notably with applications such as IOT. These tired legacy VSAT networks will continue using more space segment than they should be, inflating bandwidth OpEx costs and wasting operating budgets.
While it may seem safest to wait until the market recovers before investing in replacement systems, this is counter intuitive. The fact is that data rates have been growing faster than MHz prices have declined, meaning bandwidth costs have been increasing. At the same time, companies are accelerating their digital transformation initiatives in order to reduce costs by improving the operational efficiency of the underlying business, as well as allow for more remote operations reducing the number of crew offshore. For the remaining crew still needed offshore, having good Internet is vital to morale and welfare.
All of this is driving the need for more connectivity offshore.
This may seem like a no-win situation – if you replace legacy networks, you have CapEx pains, but if you don’t replace them, then you have even bigger OpEx agony.
If the focus is limited to controlling CapEx, operators will continue with networks that are wasting precious resources. While there is no doubt that the oil and gas industry is facing challenging times, opportunities still remain if you make strategic investments in efficiency, and prepare to use the upcoming cash flow swell to catch the next investment wave. Learn more with our whitepaper.
