Oil and Gas Companies and the Energy Transition

A. WHAT IS HAPPENING RIGHT NOW

Climate change has become one of the greatest threats of this century to the environment, as well as to global security including health, wealth and political stability. Over the past decade, energy-related carbon dioxide (CO2) emissions have increased 1% annually on average. If this average growth rate continues, it is expected to result in global warming by the end of the century of more than 3 degrees Celsius (°C) compared to pre-industrial levels. The Paris Agreement aims to limit the increase in global temperature to “well-below” 2°C, and ideally to 1.5°C (compared to pre-industrial levels) this century.

B. OIL AND GAS RENEWABLES ADVANTAGES

There are a few options in which oil companies would have a competitive advantage :

• Hydrogen

Hydrogen is one of the new markets in which oil companies could establish themselves thanks to their existing expertise in transporting and selling gas.

• Offshore technologies

The oil and gas industries, which have operated offshore for more than half a century, could leverage synergies by transferring the knowledge acquired to the offshore wind industry

• Liquid biofuels

Many oil companies have already been investing in biofuels for decades, especially through research efforts and venture capital spending. They have placed a bet on the continued demand for combustible fuels (Raval, 2019), particularly for modes of transport that so far cannot make extensive use of electricity (i.e., heavy trucks and airplanes)

C. OIL AND GAS COMPANIES APPROACH

BP was the first oil major company to diversify into renewable energy, showing interest in renewables from 1980 to 2010 with investments in solar and wind power. In 2019, BP committed to becoming a net-zero company by 2050. This means lowering emissions from the company’s operations 30-35% and reducing carbonrelated emissions in upstream oil and gas production 35-40% by 2030. By 2050, BP aims to tackle around 415 million tonnes of emissions.

The company is more oriented towards the expansion of CCS technology, with investments in two of the world’s largest CO2 injection facilities: the Quest CCS project in the Canadian oil sands and the Gorgon Project in Australia. The first is a commercial-scale CCS facility applied to oil sands operation, The second is one of the world’s largest natural gas projects, which in 2020 reached 3 million tonnes of CO₂ extracted and buried underground.

Eni started the world’s first conversion of a traditional refinery to a biorefinery producing green diesel, green naphtha, liquid petroleum gas and jet fuel (Pickl, 2019). After creating a dedicated department focused on identifying renewable energy growth opportunities, the company has emphasised its interest in renewables by forming several partnerships to develop joint projects with other companies, such as General Electric (GE) and Statoil (now Equinor).

Today, ExxonMobil is working with Synthetic Genomics (a US-based biotechnology company) to develop advanced biofuels from algae with the objective of producing 10 000 barrels of algae biofuels a day by 2025. In 2020, the company also signed an agreement with Global Clean Energy (an alternative fuel developer) to purchase renewable diesel derived from “camelina”, a plant that does not displace food crops and that could have the potential to reduce greenhouse gas emissions from road transport.

PERTAMINA is taking a strategic role in Indonesia’s integrated ecosystem of battery and energy storage. Along with Indonesia’s commitment to reduce the emission by 29% in 2030, PERTAMINA supports the Government’s efforts to reduce greenhouse gas (GHG) emissions and other emissions that cause global warming. The attempts to reduce emissions from operations and production activities include initiatives to utilize gas flares and the Blue Sky Program to urge people to use low-carbon emission fuels. Total GHG emissions reduction in the reporting period reached 6.79 million ton CO2eq.

Sources :

The International Renewable Energy Agency. INTERNATIONAL OIL COMPANIES AND THE ENERGY TRANSITION (2021)

Pertamina  Energy Transition Report