Digital Innovation and Circular Economy: A Nexus for Sustainable Oil and Gas Sector Transformation in Saudi Arabia

Amid mounting global pressure for transition to renewable energy sources, the survival and sustainability of the oil and gas sector are under threat. Relying inherently on non-renewable energy, the oil and gas sector is in dire need of competitive strategies to ensure a sustainable future while mitigating adverse environmental impacts of its operations. This study endeavors to examine the combined impact of two important factors: the circular economy and digital innovation, which can provide the needed sustainability to the oil and gas sector. It investigates how resource efficiency and environmental and social commitment as dimensions of the circular economy and cost reduction and operational efficiency as dimensions of digital innovation can contribute to a sustainable oil and gas sector in the context of Saudi Arabia—the second-largest oil producer in the world. Employing a quantitative design, the data was collected from 348 executives from the oil and gas sector through an online questionnaire survey and was analyzed in SmartPLS4 using the partial least square structural equation modeling. The findings confirmed the statistical significance, indicating that by implementing circular economy principles and adopting digital innovation, the oil and gas sector can effectively overcome the sustainability challenges it faces and remain competitive in the market. Based on the findings, this study provides important theoretical and practical implications for future researchers, the oil and gas sector, and policymakers.