It's 2020 - and it feels as though the pace of change and level of business uncertainty is increasing, with new challenges arising all the time. After several years of a depressed oil price and cost-cutting measures, followed by "cautious optimism" and "green shoots", not to mention the drawn-out negotiations of Brexit, 2019 saw significant levels of activity in upstream M&A, and some movement in service sector M&A.

Now, the conversation has moved on - climate change and energy transition hardly featured in our collective consciousness 12 months ago, yet this year discussions in the sector centre around this topic and what it means for oil and gas going forward. And specifically, what does it mean for the M&A market?

Looking back, 2019 saw significant upstream UKCS M&A activity, including a handful of huge deals involving stalwarts of the North Sea - Chevron, ConocoPhillips, Marathon, Total and BP.

Marathon was sold to RockRose; a significant portion of Chevron's UK business was acquired by Ithaca; Chrysaor purchased ConocoPhillips UK for $2 billion; Total sold a significant portfolio of assets to Petrogas Neo for over $600million, and Premier purchased a similarly valued package of assets from BP.

This was underpinned by a very active deal market for smaller deals involving both corporates or single assets or asset groups - Waldorf's acquisition of Endeavour, Neptune's acquisition of Edison and Dana's sale of a stake in its Tolmount development to Premier, to name a few.

In the midstream market, Kellas Midstream (best known for owning CATS, but with interests in other UKCS midstream infrastructure) was sold to Blackrock Global Energy & Power Infrastructure Funds. The service sector M&A market remained sluggish - although notable deals included SCF Partners' acquisition of Score Group plc for £120 million.

It seems likely there will be fewer UKCS upstream mega-deals in 2020, with many companies undergoing transition and on-boarding of resources and assets; however smaller deals remain highly probable as companies review their new portfolios.

In addition, there are several transactions ongoing, including the potential sale of Zennor by Kerogen Capital and the sale by Centrica of its 69% stake in Spirit Energy. The service sector is likely to remain a difficult market as tough conditions prevail, although John Wood Group Plc recently announced the sale of its industrial services business to Kaefer for over $100 million.

The impact of energy transition, and what this means for the oil and gas sector and M&A activity, cannot be ignored. 2019 was the year in which this came into sharp focus for all of us - Greta Thunberg, Extinction Rebellion, the extreme fires in California and Australia and the dramatic impact on nature around the globe depicted in Netflix's "Our Planet" have left us in no doubt that this serious issue requires us all to act now.

But there are no simple solutions - energy use remains key to our quality of life and the improvement of quality of life globally. Current infrastructure largely relies on fossil fuels, which have a massive part to play in the move towards net zero - gas in particular.

The Committee on Climate Change's "Net Zero" report - considered by many to be the most highly regarded and objective analysis of our way forward to 2050 -- makes it clear that oil and gas has a vital part to play in the energy transition.In fact without gas, we cannot achieve that transition to net zero.

That does not mean to say things will - or should - remain as they have been in the past. Tim Eggar, Chairman of the Oil and Gas Authority, recently called on industry to act faster and go further in reducing its carbon footprint, and suggested that an action plan should be developed with measurable targets.

He also outlinedthe OGA's intentions to integrate the UK's net zero ambitions across its core business. With the next UN Climate Change Conference (COP 26) being held in Glasgow this November, there is a genuine opportunity to use it as a catalyst to encourage change, and educate people about the changes being made across the industry - and the vital part that the sector has to play in the energy transition.

Turning to the impact this will have on the M&A market, the sector has a short window within which to demonstrate its commitments to reducing emissions across operations. Those who do not risk falling behind and becoming less commercially attractive, perhaps even losing their licence to operate.

In terms of access to finance, concerns around climate change and long-term predictions of declining growth in oil demand are definitely affecting the appetite of some investors for the sector, and this is likely to increase going forward.

However, the sector - particularly gas - has a clear role to play in the energy mix as we move towards transition. This is well understood by those involved in the sector and provided that businesses can demonstrate progress on emissions, they should remain attractive in the short to medium term.

The sector needs to become better at explaining our role in the energy transition and sharing this message positively.

This article first appeared in the Press and Journal