•    Low oil prices yet to impact on consulting work
•    US market - valued at $6.8bn - crucial to global performance
•    Efficiency drive in energy sector keeping consultants busy.

Despite oil prices slumping to their lowest price since 2009, the global energy and resources consulting market grew 6 per cent to $14.7bn in 2014 a new report from Source Information Services (Source) has found.

The report explains that the low oil prices haven’t caused many clients in the energy sector to slash consulting spend yet, but it is having an impact on where consulting demand is coming from, both within client organisations and globally. Efficiency and cost cutting services are most in demand, but the report reveals that consultants are also seeing demand for technology and M&A services as companies look for ways to respond to market conditions.

Alison Huntington, Senior Analyst from Source explained:
“A key question - that’s very hard to answer - is how long energy clients will carry on spending on consulting. Work in this sector tends to be capital intensive and long-running, but once current programmes come to an end, will cash-strapped clients shell out again on major investments?”

US market drives global growth
Source explains the health of the North American market is keeping the overall global picture buoyant. It makes up just under half the entire global market, and in 2014 grew nearly 10 per cent to $6.8bn on the back of an active utilities sector, a large and demanding energy sector, and newer areas like shale exploration, all of which created opportunities for consultants.

Looking forward, while utilities companies will continue to provide a good pipeline of work for consulting firms in the US, the North American energy sector is likely to start feeling the effects of low oil prices, leading to lower levels of growth in 2016 and impacting the state of the global energy and resources consulting market..

UK market reports steady growth
Meanwhile the fall in oil prices has created a new wave of cost cutting and efficiency projects for UK-based consultants. The cost of extracting oil from the North Sea is relatively high compared with other markets around the globe, presenting consultants with an opportunity to help bring that cost down. Long planning cycles also helped to keep consulting work on an even keel and the market grew 6.1 per cent to $816m in 2014 as a result.

Smart meters give consultants a boost in the EU
The Source report explains that globally utilities was the stand-out sub-sector, growing at 8 per cent to $3.4bn thanks to new competition, regulation, green technology, and smart metering. Smart meters in particular will have a big impact on the sector as the EU has mandated that 80 per cent of customers should have a smart meter for their electricity by 2020. The UK is pushing for all households to have one by 2020 and Italy has already implemented electric smart meters and is now working on the gas roll out. Across the globe, utilities clients are calling on consultants to help them work out what it all means for their model.

Source reports that clients are using consultants to help them work through what these changes mean for them; many are focused on customer-centric transformation, enabled by the vast wealth of data now available to them. Most are still in the early phases of planning major initiatives, so many consultants are predicting very healthy pipelines for the coming years.

Regulation drives consulting work
All parts of the energy and resources industry are seeing an increase in the number of regulatory requirements, and compliance is increasingly complex. As a result the financial management and risk consulting service line has grown 13 per cent to $3.24bn in 2014. Source explains it’s not just about meeting deadlines and being compliant, it’s also about reducing the cost of compliance, about process and technology, and even about business strategy. Clients, particularly in mature markets, are under pressure to show that they’re competitive, their businesses are healthy, and that customers are charged a fair price.

Alison Huntington from Source concluded:
“Demand in the energy and resources market is holding up in 2015, but we expect growth to decelerate through to at least 2016, when consultants may start to feel the impact of lower oil prices more acutely.”