Society

Energy conversion in oil and gas industry

Major oil and gas companies are revising their carbon reduction targets as the climate change crisis strengthens decarbonization movements around the world.

According to a report recently released by the Export-Import Bank of Korea, global oil and gas companies have strengthened their carbon reduction targets to cope with energy conversion and climate-related risks. The research report said nine major oil companies around the world, including Shell and Total, sold a total of $8.8 billion worth of oil and gas assets from 2015 to 2020. Among them, more than 50% of upstream (oil production) assets were subject to intensive withdrawal.

By company, Shell sold $50 billion (about 59 trillion won) in assets during the period, the largest, while Total was around $28 billion (about 33 trillion won). ConocoPhillips, Chevron, British Petrolium (BP), ExxonMobil, and Eni were similar at about $20 billion (about 24 trillion won), while Equinor and Repsol were about $12 billion (about 12 trillion won), respectively.

The sale of petroleum assets did not immediately lead to investments in decarbonization and energy conversion. During the period, these nine companies sold $8.8 billion in oil and gas assets, but the amount invested in low-carbon and clean energy technologies was $45 billion (about 53 trillion won), a quarter. However, the institute expects energy conversion to be the biggest driving force behind major companies’ decision to sell assets in the future. As the possibility of oil demand in Europe and the U.S. reaching its peak becomes a reality, it will dispose of more oil assets and expand investment in the renewable energy sector.

In particular, major European companies are leading the energy conversion movement by announcing investment goals and renewable energy production plans for the low-carbon sector. Seven of these nine companies, excluding Exxon Mobile and Chevron, have set a “net-zero” goal to make carbon emissions zero.

These companies are expected to significantly expand their investment in renewable energy over the next 10 years. In particular, investment in hydrogen, which has emerged as an eco-friendly energy source that will contribute to future carbon neutrality, is expected to be actively made. According to Wood McKinsie, global hydrogen demand is expected to increase about five times from 110 million tons in 2020 to 529 million tons in 2050.

Currently, fossil fuel-based hydrogen (brown, gray hydrogen) is mainly consumed for industrial use (refinery, petrochemical, etc.), but production is expected to increase and demand will expand not only for industrial use, but also for transportation, home, and power generation. BP, Shell, and Equinor also plan to expand their hydrogen business to power generation, industry, heating, and transportation sectors, while Shell and Total will invest in hydrogen fuel supply networks for transportation.

The report pointed out that Korea’s oil and gas-related companies also need to actively respond as future national and industrial competitiveness determines the competitiveness of the eco-friendly sector.

Story Source:
https://keri.koreaexim.go.kr/site/program/board/basicboard/view?menuid=007002001003&boardtypeid=168&boardid=64811

Categories: Society