KPMG: How Is AI Transforming The ENRC Sector?

Leaders in the energy, natural resources and chemicals (ENRC) sectors are turning to AI to improve efficiency, reduce emissions and support growth in a volatile market.

According to the 2025 Global ENRC CEO Outlook from KPMG, confidence in the sector’s medium-term prospects has risen to 84% up from 72% in the previous year, despite ongoing geopolitical, inflation and regulatory challenges.

The report indicates a strategic move where AI has moved from an experimental phase to a central element of corporate strategy.

Data from KPMG’s report shows that 65% of Chief Executive Officers now identify generative AI as a top investment priority.

This represents a 12% increase from the previous year. Furthermore, 72% of CEOs plan to direct between 10% and 20% of their budgets towards AI initiatives within the next 12 months.

AI investment and executive expectations

This increased investment is accompanied by high expectations for returns. The report found that 66% of CEOs anticipate a return on their AI investments within one to three years, a substantial increase from 15% in 2024.

This confidence in AI’s financial viability is reshaping operational and enterprise functions across the industry.

Shreyansh Upadhyay, Lead of Global AI for ENRC at KPMG International, explains: “AI is fundamentally reshaping the oil and gas sector by unlocking transformative gains in productivity, accuracy and efficiency across both core operations and enterprise functions.”

Shreyansh adds: “From optimising drilling and reservoir performance to maximising profitability in refining and renewable assets and streamlining supply chains and finance, AI empowers faster data-driven decisions that reduce risk and create sustainable value. It’s not just automation, it’s the foundation for smarter, more agile and future-ready operations.”

The digital transformation journey is accelerating with a clear progression from generative AI to agentic AI.

The KPMG report states: “The move from GenAI to Agentic AI is accelerating digital transformation with more than half (51%) of ENRC CEOs expecting Agentic AI to have a significant or transformational impact, notably in operational and workforce efficiency.”

AI adoption and associated hurdles

While a majority of executives recognise the need to “keep pace with AI”, they also point to several barriers to its implementation.

According to the report, these include ethical concerns cited by 55% of CEOs, fragmented data systems by 49% and regulatory complexity by 47%. These challenges require careful navigation to ensure responsible and effective AI deployment.

Gillian Morris, Lead of Global Chemicals at KPMG International, says: “When it comes to AI, companies should design a suitable governance framework over how they use AI agents and data to ensure they stay aligned with ethics and international law”.

The complex global landscape also plays a role.

Jonathon Peacock, Lead of Global Oil and Gas at KPMG International, notes: “Geopolitics has a major influence on ENRC companies who must navigate varying regulatory environments around the world with differing appetites for the energy transition.”

AI’s impact on ESG and net zero goals

Sustainability is no longer a peripheral concern but a core component of business strategy.

The report reveals that 72% of CEOs confirm that ESG principles are embedded in their corporate strategy.

AI is emerging as a critical tool in advancing these sustainability goals.

The data shows 82% of CEOs believe that AI could support emission reductions and help to optimise energy use.

In addition, 74% of CEOs believe that AI could boost climate risk analytics to better model future scenarios. This demonstrates a growing consensus on AI's role in the energy transition.

Mike Hayes, Lead of Global Climate Change, Decarbonisation and Renewables at KPMG International, says: “Energy and the energy transition remain absolutely critical to the sustainability and climate agenda”.

Mike also highlights the practical challenges: “Access to renewable electricity, in particular to help meet growing data centre demand, requires significant upgrades of grids and an easing of permitting in regions like Europe to get projects off the ground. This calls for collaboration between corporates and government.”

AI is increasingly viewed as the operating system for the energy transition, facilitating everything from real-time grid balancing to predictive maintenance.

The primary challenge for ENRC leaders is to integrate secure, high-quality data and strengthen ESG governance to ensure that AI-driven initiatives deliver measurable outcomes beyond the pilot stage.