Cybersecurity Gaining Prominence in Digital Transformation of Oil and Gas Companies
The oil and gas industry is embracing digitisation and companies in the domain are at the various stages of their digital transformation journeys. While a majority of the companies are still in the early phase, not all of them are completely aware of the critical significance of cybersecurity that ensures the safe, secure, reliable, and efficient operations in the long run. With rising knowledge about the vulnerabilities to cyber-attacks, the number of companies taking a proactive approach towards security is increasing gradually.
With faster intervention of next-gen technologies such as Internet of Things (IoT), Industrial Internet of Things (IIoT), Artificial Intelligence (AI), and big data analytics, the risk of exposure to newer types of cybersecurity breaches also multiples. The rising need for identification of cyber-physical risks to mitigate massive potential losses in future is driving the oil and gas cybersecurity market. As a number of oil and gas companies are beginning to invest heavily on advanced cybersecurity solutions, the global oil and gas cybersecurity market is likely to receive a strong impetus in the near future.
High Initial Investment Restricts Growth Opportunities
The oil and gas cybersecurity market is driven by an alarming increase in cybercrimes in upstream, midstream, and downstream business operations. Investments in cybersecurity systems effectively minimizes the cost incurred due to data breach. Major established players in oil and gas business are beginning to deploy cybersecurity systems to avoid confidential data breaches. Oil and gas firms such as Royal Dutch Shell, British Petroleum, and Total SE are actively using cybersecurity systems to combat several external and internal threats.
Costs involved in the installation of cybersecurity products and systems are high, which adds to the reluctance of several mid-scale oil and gas firms about spending a considerable amount of money in the deployment of cybersecurity infrastructure. Declining prices of crude oil and natural gas also hinder massive investments into cybersecurity systems. However, growing concerns related to safeguarding of information and business processes from cyber-threats are paving the way for cybersecurity solution providers in the global oil and gas cybersecurity market.
Upstream Oil and Gas Most Prone to Cyber-attacks
Oil and gas cybersecurity is required for all three key areas - upstream, midstream, and downstream. Upstream is the exploration and production sector, and comprises oilfield searching for optimised production. The research data that carries the information about the proficient fields for production and its physical parameters is critical and vulnerable to the threat of being hacked. Followed by the field survey, are the contract documents, which define the agreed upon bid, which if hacked by the competitor, may result in altered numbers and thereby a dissolved contract. Upstream also includes drilling, operating, and maintaining the exploratory wells which would bring the crude oil to the surface. Hence, increase in the process control and automation in upstream oil and gas sector also demands cybersecurity.
Midstream sector of oil and gas industries comprises the storage, processing, transportation, and setting up of the pipelines for oil flow from the site of production to the respective refineries and distribute it to the downstream distributors. As a result of cyber attack, the distribution of the crude oil and refined products may be controlled by the hackers. Manufacturing, refining, wholesale, and marketing are the activities at the downstream that can be easily attacked by unauthorised accounts. Most of the oil and gas cyber-attacks are done by Chinese and Russian hackers. These attacks and cyber threats pose a significant monetary risk to the quality of the product. Operational technology such as the use of supervisory control and data acquisition system (SCADA), Open Platform Communications (OPC) servers, field devices, and distributed control systems is more prone to cyber-attacks, and thus require critical oil and gas cybersecurity.
North America and Europe Set to Present Attractive Markets by 2025
North America is currently the most attractive oil and gas cybersecurity market, closely followed by Europe. Year-on-year investments in the installation of efficient cybersecurity systems in these regions have fuelled demand growth. Rising cybersecurity threats in oil and gas industry, coupled with increasing risks of unauthorized information access, are driving the demand for cybersecurity system in Europe and North America. These two regions remain at the forefront in terms of awareness about cybersecurity and adoption of advanced technology. The industry here is rising up to tackle cybersecurity issues through joint programs and initiatives.
The developed nations such as the US, China, Japan, and Germany, suffered the bulk loss of approximately $205 Bn due to cybercrime. The world’s worst hack (in 2012) was faced by Saudi Aramco, one of the biggest oil companies in the world where all the 35,000 computers were wiped in an hour and the ability to supply 10% of the world’s oil was at risk. In 2017, a $20 Bn joint petrochemical venture between Saudi Aramco and Dow Chemicals also experienced a spate of hacking attacks. In August 2014, the Norwegian oil industry was attacked, where the data of 50 oil companies was hacked and 250 more were warned of the cyber-attack. The wealthier companies and countries are more likely to be targeted by the cyber attackers.
The demand for cybersecurity systems in Asia Pacific is driven by the awareness about safe practices and installation of systems to protect several assets. Several Asian countries such as China, India, Australia, Japan, and Indonesia have shown their interest in the establishment of a proper anti-cybercrime network. These countries are aware of the venerable impacts of cyber-crime in the oil and gas industry, thus raising demand for oil and gas cybersecurity systems and solutions in Asia Pacific. In the Middle East & Africa, GCC countries are particularly the major oil and gas producers and exporters, considering investments in oil and gas cybersecurity post-Saudi Aramco cyber-attack.
Global Oil and gas Cybersecurity Market: Competitive Landscape
Some of the key players involved in oil and gas cybersecurity market include Microsoft Corporation, Symantec Corporation, CISCO Systems, Inc., Intel Corporation, SAP SE, Honeywell Corporation Inc., Parsons Corporation, GE, DXC Technology Company, Siemens AG, and Ernst & Young Global Limited (EY).
In April 2021, Saudi Aramco, the world's largest oil-exporting company, signed an agreement with KPMG International Limited (one of the big four in accounting) to examine cybersecurity compliance among its third-party suppliers. Earlier in November 2020, Parsons Corporation acquired Braxton Science & Technology Group, LLC (Braxton) and its subsidiaries in a deal valued at US$300 Mn. The acquisition is expected to enhance the former’s positioning in the space, cyber, and intelligence markets.