Digital transformation could save oil & gas industry over $320 billion

Digital transformation could save the oil and gas industry over US$320 billion in the next five years, according to Rystad Energy.

The consulting firm highlighted five key areas of operational digitalization for the sector: drilling optimization, autonomous robotics, predictive maintenance, reservoir management, and logistics optimization.

The oilfield services (OFS) business ecosystem is expected to undergo a significant transformation as continued merger and acquisition (M&A) activity, new business partnerships with technology firms, and greater software integration drive digital-first business strategies for key OFS players, Rystad Energy stated.

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Digital transformation in the oil and gas industry

Digitalization, despite being loosely defined and difficult to quantify, appears increasingly in financial disclosures. Most companies across the supply chain still do not report a standalone, GAAP-level “digital profit” the way a pure software-as-a-service firm would. That trend is beginning to shift, however.

SLB, for example, now reports a dedicated digital division and expects that segment’s full-year margin to reach 35 percent in 2025, according to Rystad Energy. Another example is Viridien, a global technology and geoscience leader, whose digital, data, and environment (DDE) segment generated $787 million in revenue last year (up 17 percent) and delivered $458 million in adjusted EBITDA.

These digital revenue streams tend to offer more stable, resilient growth paths that are less sensitive to the volatility of upstream capital spending.

“We estimate that $320 billion is a modest figure, as broader digital adoption across other business domains could generate even greater value,” said Binny Bagga, SVP, supply chain at Rystad Energy. “To realize this, executives will need to deliberately prioritize digital transformation by fostering a less risk-averse business culture.”

A notable trend is the growing use of partnerships with technology firms, which complements internal capability building and acquisitions in the digital space. The overall intensity and frequency of these partnerships have increased sharply, especially since 2021.

This pattern highlights a clear industry shift toward digital transformation, with large suppliers actively accelerating their collaborations with technology partners in recent years.

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Digital transformation barriers in oil and gas

However, the widespread adoption of digital oilfields faces significant barriers, including substantial upfront costs for hardware, software, ongoing maintenance, and cybersecurity, Rystad Energy said.

These hurdles are especially acute for smaller firms or those operating with legacy infrastructure, complicating the justification of such investments amid economic uncertainty. To mitigate these challenges, mid-tier companies are selectively enhancing their offerings with targeted digital capabilities, while smaller niche players and specialized software vendors focus on delivering modular, custom solutions.

“The investment community is increasingly valuing energy-technology narratives, with service companies that clearly articulate technology-driven and recurring-revenue strategies often commanding higher valuation multiples than those tied solely to equipment cycles,” Bagga added. “However, such premium valuations hinge on demonstrated scalability. Emphasizing digitalization is a direct pathway to creating lasting shareholder value.”

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