Ahead of The Curve:
2025 Innovation Levers for Energy

The push for energy security and cost reduction is compelling some global energy businesses to reconfigure their value chains to meet dual demands: maintaining profitability and resilience while pursuing a greener path in selected and strategic interventions. Positioning natural gas as a key transition fuel to bridge the gap between oil and renewables drives massive investments in conventional and unconventional natural gas assets. Integrated energy majors – mainly NOCs – also invest in building new capacity in petrochemicals and acquiring chemical holdings as part of their growth and diversification strategies.

At the same time, digitalization, AI-enabled automation, and, in some cases, a focus on local proximity enables new levels of efficiency in energy company value chains, cutting costs while reducing emissions. To succeed, energy companies must be prepared to reinvent their role in a rapidly shifting landscape affected by technology’s ever-shortening innovation cycles, sustainability demands from the public and regulators, and new energy sources. 

Five key innovation levers will pivot industry focus and investment priorities this coming year:

2. Pragmatic global collaborations driven by the energy transition

The energy transition is a global challenge, and energy companies in many regions face increasing pressure to accelerate their liquefied natural gas (LNG) projects as natural gas solidifies its role as a critical transition fuel. This pressure leads to novel collaborations in the gas value chain and low-carbon products. For example, KSA’s $100B effort to accelerate in-country gas production will lead to strategic partnerships to expand its domestic output for local use and export to diversify revenue. This aligns with Saudi Arabia's broader strategy to lead in natural gas and build advanced infrastructure. Increasingly, we expect similar partnerships and joint ventures to capitalize on a growing hydrogen economy. These global partnerships, driven by the urgency of the energy transition, need to demonstrate positive local impact: in-country employment and localized and distributed energy infrastructure (including renewable energy projects and energy storage systems) that reduce dependence on volatile global energy markets.

The implications extend beyond the energy industry: To comply with regional data regulations and manage data sovereignty requirements, energy companies depend on distributed digital highways. The industry must work with cloud hyperscalers to set up in-country data centers to support real-time data analytics, AI-driven operations, and cloud services. Even as energy companies compete, they must collaborate on building these digital infrastructures, which will become the shared backbone that enables faster, more secure data handling and drives collective open innovation and efficiency.

3. Vertical integration of adjacent value streams

As energy companies seek new avenues for growth, they are increasingly eyeing adjacent value chains. One of the more promising opportunities involves co-locating manufacturing operations near energy generation sources, as exemplified by a joint venture between Aramco and Baoshan to produce steel in the Kingdom of Saudi Arabia. Energy companies can explore opportunities (partnerships, acquisitions, and corporate ventures) in sectors like steel production, chemicals, and cement, mainly where access to cleaner energy sources — such as gas, electricity, and hydrogen — can significantly lower production costs and emissions. This approach supports greener processes and drives economic benefits through near-shoring while reducing reliance on global supply chains and lowering emissions associated with transportation. The technologies that underpin emerging value chains become the umbilical cord, bringing transparency to manufacturing operations and monitoring and balancing supply with demand. These models help companies share and balance risk and reward. 

4. A new era of global capability centers

As energy companies in North America and Europe struggle to find local talent, global capability centers (GCCs) have evolved from low-cost, task-based operations into hubs of deep expertise and innovation. These centers around the world are cultivating business and engineering, geoscience, and shared services in local talent hubs, addressing talent shortages in traditional headquarters and regional locations, and providing fertile ground for driving innovation and cutting-edge technology to accelerate digital transformation in the energy sector. For instance, GCCs can be instrumental in integrating AI-driven tools that improve exploration accuracy, allowing companies to reduce risk and shorten time-to-market for new oil discoveries. These hubs enable energy companies to tap into a broader pool of specialized talent, utilize state-of-the-art data analytics, and deploy scalable solutions that would be challenging to develop in-house.

5. Cloud adoptions and AI readiness

In recent years, SaaS adoptions have shown a spotlight and highlighted an important reminder: business ownership is critical to unlocking value. The importance of business ownership cannot be overstated when unlocking value from cloud adoptions and AI readiness. And while agentic AI may ultimately disrupt the way logic enables business workflows, the same is true. Process change and flexibility of mindset are keys to unlocking value in transformational solutions and platforms. For example, many organizations have learned through SaaS adoptions that they can accelerate their transition and their realization of value by adopting a frame of reference of “How can we change to embrace this innovation in the industry?” as opposed to “How well does this solution fit my business?” These investments are expensive propositions with significant ROI, but only if enterprises commit to adapting to solutions rather than the other way around. Process leaders must be empowered to evangelize change to maximize a solution’s effectiveness, even if some adjustments are initially unpopular. Industry solutions powered by AI and predictive analytics will be critical for driving efficiencies and insights, and companies that recognize the importance of business ownership and traditional interventions, including business analysis and change management, will be well-positioned for the step-change.

Sidharth Mishra
Vice President – Global Practice Head, Domain & Consulting Energy

Susie Coppock
Senior Partner - Domain & Consulting Energy

Dr. Lakshmikantha Rao Hosur 
Senior Partner – Energy, Resources, and Decarbonization