Baxi flags ESG talent gaps, AI blind spots in oil and gas; outlines biofuels, digital forecasting strategies for India’s energy transition
With the rising need for gasoline and the government’s mandate for EVs and biofuels, Deepesh Baxi, CFO of Nayara Energy, offers his thoughts on how to operate in India’s energy revolution. In this interview with BW CFO World, Baxi discusses how to strike a balance between short-term profitability and long-term decarbonisation, the financial implications of regulatory changes, and the use of digital tools in cost reduction. He also highlights the growing talent gap in sustainable financing and raises an early warning about an unrecognised blind spot in the oil and gas sector’s use of technology.
India is shifting rapidly towards energy transition, yet fuel demand continues to rise. How do you balance short-term profitability with long-term decarbonisation and diversification?
Balancing short-term profitability with long-term decarbonisation and diversification is indeed a complex challenge, especially in a rapidly evolving energy landscape like India’s. In the short term, profitability can be maintained by optimising existing resources and infrastructure, such as enhancing refinery efficiency and adopting advanced technologies to reduce operational costs and improve margins. However, long-term decarbonisation and diversification require a strategic shift towards cleaner energy sources, which involves substantial investments. Investing in solar, wind and biofuels aligns with global sustainability goals and opens new avenues for growth and innovation.
The key to success lies in linking each initiative to measurable operational levers and building a portfolio view of returns over time. By optimising current operations and strategically investing in renewable energy and innovative technologies, India can achieve a resilient and sustainable energy future. As Hardeep Singh Puri, Minister of Petroleum and Natural Gas, said, “Energy transition is not about abandoning any one source of energy, but about embracing all sources of energy in a balanced manner.”
The government’s push towards biofuels and EVs is accelerating. How do these policies influence long-term financial planning?
In the short term, adopting biofuels and EVs requires substantial investment in infrastructure, research and development. Companies need to allocate resources to build charging stations, upgrade facilities and develop new technologies. These investments are essential for staying competitive in a rapidly evolving market.
From a long-term financial perspective, the shift towards biofuels and EVs can diversify revenue streams. Investing in biofuel production and EVs reduces dependency on traditional fossil fuels and creates new business opportunities in agriculture and waste management. This commitment to sustainability not only enhances brand value, optimises costs and improves margins but also contributes to environmental conservation and reduces carbon footprint.
How can companies leverage digital forecasting, automation or AI to improve operational efficiency and reduce cost?
By analysing historical data and identifying patterns, businesses can make informed decisions about inventory management, production schedules and supply chain logistics. This proactive approach minimises waste, reduces excess inventory and ensures efficient resource allocation.
Automation transforms repetitive tasks into streamlined processes, freeing up human resources for strategic initiatives. Artificial intelligence provides deeper insights into business operations, such as predictive maintenance to monitor equipment performance and prevent costly breakdowns. Additionally, AI-driven analytics optimise pricing strategies, enhance customer segmentation and personalise marketing efforts. By leveraging these technologies, companies can achieve significant improvements in operational efficiency, cost reduction and competitive advantage.
What financial capabilities or talent gaps do you see emerging in the oil and gas sector?
The oil and gas sector is undergoing significant transformation, driven by technological advancements, regulatory changes and the global push towards sustainability. This dynamic environment presents both opportunities and challenges in terms of financial capabilities and talent gaps. One emerging financial capability is expertise in sustainable finance. As companies focus more on environmental, social and governance (ESG) criteria, relevant skill sets are crucial for securing funding for renewable energy projects and ensuring compliance with evolving regulations. For example, the rise of green bonds and carbon credits has created a need for financial experts who can navigate these new markets.
There is a shortage of professionals with a deep understanding of both traditional oil and gas operations and new energy technologies. For instance, the transition to renewable energy sources requires engineers who are also well versed in financial modelling and sustainability practices. Bridging this gap requires a multidisciplinary approach, combining knowledge of engineering, finance and sustainability.
What is one blind spot that most CFOs in your sector still underestimate?
Predictive insights and blockchain technology, with its enhanced transparency and security, can revolutionise financial transactions, reducing fraud and building trust with stakeholders. Advanced data analytics can uncover hidden patterns in financial data, offering a treasure trove of insights for strategic decision-making.
Integration of these technologies achieves significant cost savings and operational efficiencies. Visualise finance teams freed from routine tasks, thanks to automation, allowing them to focus on strategic initiatives. Real-time data analytics can provide CFOs with up-to-the-minute information, enabling agile and responsive financial planning. Embracing and fully integrating these technologies into financial operations can unlock new levels of efficiency, accuracy and strategic insight, driving better financial performance and competitive advantage.
