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I once had a long conversation with a colleague of mine, a Partner in the Boston Consulting Group. I asked him why he had retired slightly early, and he told me in all seriousness that he had realized that there are only eight basic business strategies in the world, with a few variations, and now that he had helped numerous companies over a 25 year period choose between and implement all eight successfully, he was ready to quit.

We also agreed mutually, however, that all the great strategy in the world can be ruined unless companies recognize three simple additional factors for success: getting the timing of investing, buying or selling right; implementing excellent strategy well; and lastly, “following the wealth trends relevant for your sector”. In this industry, driven by commodity prices and not by consumer fashion, timing is usually about riding the pricing cycles well, selling near a peak, buying near a trough, investing in anticipation of a peak 5 years from now and avoiding being cash poor at the bottom of a downturn. Implementation is the subject of a massive outpouring of business books and consulting presentations so I am not even going to start to address that here. But the last of these three principles has intrigued me recently, both for KBC and for our clients in the oil and gas industry.

So where is the new wealth in oil and gas markets in the next decade?  Being someone who believes in simplicity rather than complexity, here is my simple man’s answer, beyond the simple wealth creation from continued, overdue horizontal consolidation:

For Mid- and Downstream, focusing on the new West-East corridor, spanning from Cairo to Beijing. There are 20 new megacities (over 10 million people in each) being created in that corridor in the next ten years, while the world has only 18 at the moment. BRIC is the wrong “follow the wealth” principle and CIVETS (Colombia, Indonesia, Vietnam, Egypt, Thailand and South Africa) is an insufficient secondary guide. Within the West-East corridor, I have a particular belief that the triangle between Iran,“Stans”, FSU and India provides a very interesting wealth creating arena for the next decade.

Upstream remains the highest wealth creating sector, despite its current largescale cyclical downturn. Continue to invest, especially at a time when it is unfashionable with investors and analysts alike. Within Upstream, it goes without saying that focusing on opportunity at under $90 per barrel makes sense at the moment.

Automation technology and expert skill building are another important wealth creating hotspot, no matter where you are in the world. Within this arena, energy efficiency is one of the greatest wealth creating opportunities, often under resourced and well beyond the benefits of de-manning in scope and profit results.

Cutting out the middlemen and going directly to expertise source is the last wealth creating opportunity I see. We have seen a trend in packaging, one-stop shopping and bulking up which has actually cost the industry from added overhead. Like in the online consumer markets with trends away from largescale department stores towards specialists and online generalists with no costly brick assets, it is time for the industry to offer direct, expert, lower cost offerings rather than smart packaging with complex connections. This may prove to be the most controversial statement in this note, but I am not going to back away from it.

Of course there are other focal points, but in my view, your strategy will be enhanced if you bias your strategic efforts towards these “follow the wealth” arenas.