Cost Control and Digital Transformation Become Core to Oil and Gas Development

Deloitte's recently released report, "Outlook for the Oil and Gas Industry 2026," outlines a clear dual-track development path for the sector: on one hand, the industry will strengthen profitability and resilience of its core oil and gas business through strict capital discipline and continuous cost optimization; on the other hand, it will actively advance large-scale digital transformation centered on artificial intelligence (AI), fundamentally improving operational efficiency across the entire value chain, lowering project break-even points, and establishing a solid technological foundation for future energy transition. Cost control and digital transformation will become central themes in the oil and gas industry's development in the coming year.

The report emphasizes that, facing tariff volatility and supply chain challenges, oil and gas companies are increasingly viewing digitalization as a key driver to enhance operational efficiency, with expected significant increases in spending on artificial intelligence (AI) and generative AI—marking the beginning of a profound technological and managerial transformation within the industry.

Zera Austin, Deloitte's U.S. Energy and Chemicals Industry Leader, pointed out that oil and gas firms are confronting multiple cost pressures, among which rising supply chain costs due to U.S. tariffs on critical materials such as steel and aluminum are particularly prominent. Data shows potential cost increases of up to 40% for oil country tubular goods (OCTG), while costs for offshore services, onshore operations, and liquefied natural gas (LNG) construction have generally risen by 4% to 15%.

"This not only drives up operating costs and causes frequent supply chain disruptions but also significantly dampens investment momentum," said Austin. The report notes that over $50 billion in new offshore projects face risks due to delays, driven by inflationary pressures and financial uncertainty.

To address these challenges, oil and gas companies have implemented various measures, including forming dedicated "tariff response teams," renegotiating contracts, increasing spare parts inventories, and optimizing business portfolios alongside structural cost reductions. Austin emphasized that the industry's core challenge today lies in how to precisely allocate capital toward areas that deliver both short-term profitability and long-term sustainable growth amid a volatile policy environment.

The report reveals that to improve operational efficiency and resilience, the oil and gas sector is accelerating its digital transformation, with artificial intelligence (AI) and generative AI (GenAI) becoming top priorities for technology investment. Deloitte forecasts that by 2026, spending on AI and GenAI by U.S. oil and gas companies could account for more than half of their total IT expenditure—up sharply from the current level of about 20%.

"This may be the most significant technological transformation moment the oil and gas industry has ever faced," said Austin. AI applications are rapidly expanding from back-office process improvements into core production and operations, focusing on equipment maintenance, process optimization, asset performance management, and enabling "connected workers" and "integrated operations."

In equipment maintenance, the industry is evolving from predictive maintenance toward more advanced prescriptive and even self-healing maintenance. This shift represents a move beyond isolated pilot projects toward achieving intelligent, autonomous operation across all business processes—optimizing end-to-end value chains through autonomous systems.

Although historically cautious in adopting new technologies, the report finds that the oil and gas industry now displays a notably positive and open attitude toward AI and GenAI. "Interest among oil and gas companies in leveraging AI and technological change for growth has reached unprecedented levels in history," concluded Austin.

Overall, 2026 will be a pivotal year for the oil and gas industry's focus on organic growth and strategic execution. A company's core competitiveness will hinge on its ability to strike a delicate balance between tightly controlling current costs and investing in future technologies, and on successfully deploying digital tools and converting them into tangible business value. This will directly determine their competitive position in the future energy landscape.

The report concludes by emphasizing that truly successful transformation goes far beyond mere technology procurement. It depends more deeply on an organization's ability to integrate technological innovation, business process reengineering, organizational capability upgrading, and long-term strategic discipline—thereby building unique and sustainable competitive advantages in an era of profound uncertainty.