SINGAPORE: The economic trauma caused by the coronavirus pandemic persuaded energy companies to step-up investments in renewables, hydrogen and other low carbon alternatives, but fossil fuels will remain dominant for the foreseeable future, industry executives said.
Reeling from the onset of the pandemic, global oil consumption shrank by more than 20% in the second quarter and prices hit their lowest in decades, making companies rethink how fast they should make the transition away from reliance on oil and gas.
“Everyone’s talking about this great reset... What do we need to do to survive this?” Datuk Arif Mahmood, Petronas’ executive vice-president and CEO of downstream, said at the virtual Platts APPEC 2020.
“Energy transition will be pushed forward much faster, ” he concluded.
The Malaysian state energy company posted a US$5bil loss in April-June and has set up a team to reshape its portfolio and expand in solar and wind for power generation.
Oil majors such as BP have set ambitious targets while Chinese state energy companies tiptoed into renewables.
Felipe Bayon, chief executive of Colombia’s Ecopetrol, said the company wants to go from zero to 300MW in renewable power generation by 2022 for its own use.
Besides expanding into solar and wind for power generation, more energy companies are researching blue hydrogen produced from natural gas and using carbon capture and storage (CCS) to reduce emissions in the process.
The hydrogen could be used in power plants and fuel cell vehicles.
Royal Dutch Shell is involved in biomethane, biofuels and hydrogen and has done “significant work” on CCS as the energy major strikes a balance between energy transition and its core hydrocarbons business, Mark Quartermain, Shell’s vice-president of crude trading and supply, told the conference.“We understand that energy transition is coming. We still see, of course, a huge future in our hydrocarbon business, but when it comes to energy transition we need to be in these markets, ” he said.
Heads of research at commodity trader Vitol and Citigroup expect CCS to be the next key area of development.
“Hydrogen and carbon capture are more likely in short term to be contributing to decarbonization, ” Giovanni Serio, Vitol’s global head of research, said, calling on the industry to invest more in CCS. — Reuters
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