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The total amount of oil produced in the first half of 2021 was actually slightly lower than in the first half of 2020, according to new data from the International Energy Agency.

Roger Milley/iStockPhoto / Getty Images

A global acceleration of net-zero emissions efforts over the past six months has driven a flurry of mergers, acquisitions and partnerships in the energy and mining sectors, which began before a surge in North American oil production over the summer.

But overall global fossil fuel production remains shaky. Even as countries gradually reopen and relax COVID-19 restrictions, the total amount of oil produced in the first half of 2021 was actually slightly lower than in the first half of 2020, according to new data from the International Energy Agency.

Despite energy market uncertainty, legacy firms are interested in forging innovative partnerships to achieve net-zero goals, according to PricewaterhouseCoopers’ midyear energy, utilities and mining market report, also released Tuesday.

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The result has been more non-traditional initiatives, including a joint plan by Hydro-Québec and natural gas utility Énergir to work together to reduce heating-related greenhouse gas emissions, and Suncor Energy Inc. and Atco Ltd. joining forces on a proposed hydrogen power generation facility.

Greg Oberti, a partner with PwC Canada, says there has been a swing toward forging those kinds of partnerships across multiple sectors as companies position themselves in a rapidly diversifying energy world.

“We are seeing a marked change in the way in which companies are responding to the focus around net zero. And what’s really fascinating is, we’re seeing companies that wouldn’t normally interact doing so in a really pro-active manner,” Mr. Oberti said in an interview.

The result, he said, is a blurring of the lines between oil and gas, utilities and financial services companies when it comes to climate change and Canada’s energy transition.

“There’s so much in flux and there’s so much that is evolving,” Mr. Oberti said. He added that companies that identify gaps in their own capabilities and strike partnerships to plug those gaps – whether through acquisitions, strategic alliances or joint ventures – will be best positioned to deal with the future.

Even though oil prices have improved in recent months, PwC expects energy production companies to remain cautious with their capital spending plans into 2022.

And as foreign producers move away from carbon-intensive assets, Tuesday’s report notes that selling their Canadian holdings “could prove challenging,” given the limited number of potential buyers.

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June, 2021, data from the IEA, released Tuesday, showed a 7-per-cent increase in the total global production of crude oil, natural gas liquids and refinery feedstocks compared with June, 2020. Output from refineries, meanwhile, increased about 12 per cent year on year.

Canadian production surged by 21 per cent in June, 2021, compared with the same month last year. The U.S. also upped production by 7.8 per cent year on year.

But the Americas – made up of Canada, the U.S., Mexico and Chile – was the only region with production growth. In Europe, it fell by 10.4 per cent, and by 27.3 per cent in the Asia-Oceania region.

On the natural gas side, global production increased by 1.3 per cent compared with June, 2020, while gross consumption increased by 4 per cent over the same period. However, overall natural gas production decreased by just over 2 per cent in the first half of 2021 compared to the same six months last year.

Looking ahead, PwC partner Kris McConnell expects energy firms will continue to consolidate in the short to medium term as they focus on driving down costs and increasing efficiencies.

Mr. McConnell also foresees more joint ventures involving Indigenous partners, both as a theme coming out of reconciliation and driven by the increased importance investors are placing on environmental, social and governance (ESG) factors.

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“We’ve seen a lot more momentum around ESG in the marketplace over this period since COVID started, particularly in North America,” he said. “Doing nothing is not helpful in this environment.”

And while Mr. McConnell has heard rumblings of capital spending increases in oil and gas, he said “how much of that is going to be organic versus inorganic growth in the market still remains to be seen.”

“I think a lot of it is going to be focused on developing core areas. That’s what’s going to drive activity.”

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