Geopolitical uncertainty and over-regulation topped thelist of outside threats to growth at the world's oil and gas companies, accordingto PricewaterhouseCoopers' Global CEO Survey for 2016.
The results reflect the potential effects of and , as well as thefact that a high number of companies in the survey are state-owned. The survey canvassed71 oil and gas chief executives in 34 countries as part of PwC's larger global CEOstudy. Nearly 90% of the respondents cited geopolitical uncertainty while 87% citedover-regulation.
About two-thirds of the CEOs told PwC that they plan tocut costs in the next year.
Increasing tax burdens and exchange-rate volatility wereeach cited as concerns by 76% of the CEOs.
Similarly, 83% of respondents in the oil and gas cohortchose "government and regulators" as the stakeholder group most likelyto affect their companies' strategies. "Customers and clients" came insecond at 73%, followed by "industry competitors and peers" at 54%.
The companies surveyed have darkened their already gloomyoutlook on global economic growthin the energy industry, as the share of CEOs optimistic about improvement declinedto 27% from 35% in 2015, according to PwC. Also, 72% of oil and gas CEOs lamentedthat threats to their businesses today have increased compared to three years ago,owing to the recent and continuing conditions of oversupply and low demand growthdriving prices down.
Despite this, confidence in revenue growth over the next12 months shrank by only 1 percentage point from the previous year's survey results,to 28%. PwC attributed the year-over-year stability in the companies' confidencelevels to the responses of downstream companies, which can benefit from lower oilprices.
Seven in 10 of the CEOs believe business success in the21st century will not hinge solely on financial profit. To respond well to evolvingstakeholder expectations, oil and gas CEOs said they should better measure key risks,innovation and environmental impact. According to PwC, the respondents also showeda resolve to improve the public image of the energy industry by communicating moreon company values, business strategy and environmental impact.