The oil and gas industry needs to invest more in decarbonization amid an inevitable phase-down of fossil fuels underway, according to the head of one of the biggest national oil companies and president-designate of the COP28 climate summit in Dubai.
The oil industry shouldn't be seen as hampering decarbonization efforts in any way, said Sultan Ahmed Al Jaber, COP28 President-Designate, Minister of Industry and Advanced Technology of the United Arab Emirates (UAE), and group CEO of the Abu Dhabi National Oil Company (ADNOC).
"I don't want this industry to be seen in any way, form or shape that they are going against the phase down [of fossil fuels]," Al Jaber told the Financial Times at the ADIPEC energy conference this week.
"This [phase down] is happening," he added.
At ADIPEC this week, the top executives of the world's largest oil companies said the industry has the tools to be a driver of the energy transition, but defended the recent strategies, after last year's crisis, to continue pumping oil and gas to supply the world with the energy it needs now.
Net-zero plans at oil firms remain intact, but energy security has taken over the narrative in the past year and a half. The oil industry is investing in the decarbonization of operations and in new solutions to tackle emissions, but has signaled in recent months that the energy transition should be paced and will take a long time. In the meantime, the world will still need oil and gas, and it will fall on the industry to supply the fossil fuels, which still account for 82% of the global energy mix.
Oil Industry Is "Central To The Solution"
COP28 President-designate Al Jaber welcomed the energy industry representatives at ADIPEC with a call to the sector to play a crucial role in progressing decarbonization and the energy transition.
"This industry can and must help drive the solutions. For too long, this industry has been viewed as part of the problem, that it's not doing enough and in some cases even blocking progress," Al Jaber said at the opening of the energy conference.
"This is your opportunity to show the world that, in fact, you are central to the solution."
ADIPEC's key theme this year was 'Decarbonising. Faster. Together.', and the head of ADNOC and the COP28 climate summit called for greater collaboration on decarbonization.
More than 20 companies, accounting for up to a quarter of the world's oil and gas production, are currently in talks to join an initiative expected to be unveiled at the COP28 summit next month and tentatively billed as the 'Global Decarbonization Alliance,' al Jaber told FT.
Ahead of the climate summit, ADNOC announced this summer it is bringing forward its target for net-zero emissions to 2045 from a previous target of 2050, becoming the first oil company in its peer group to commit to net zero in 2045.
ADNOC's Al Jaber said in July that the oil and gas industry needs to "step up its game" to cut emissions and accelerate the shift toward cleaner energy solutions.
Oil Majors Defend Decisions To Address Energy Security
Amin Nasser, president and CEO at the world's biggest oil firm, Saudi Aramco, said at ADIPEC this week,
"At Aramco, we believe that energy security and sustainability can co-exist. We remain committed to helping supply the world's growing energy needs as we also expand our efforts to develop lower-carbon solutions that will provide future generations with cleaner and more sustainable energy."
Aramco has been warning for years that underinvestment in oil and gas, due to ESG concerns and activism, would come back to haunt the global energy supply, potentially creating shortages while the world will still need oil and gas.
International oil majors have recently leaned toward Aramco's narrative to look to provide not only the 'energy of the future' but the energy the world needs today, that is, oil and gas.
"We need all of it, not some parts of the energy value chain. We need all of that to come together," Shell's CEO Wael Sawan said at ADIPEC, as carried by The National.
Sawan dismissed criticism that Shell is changing direction and said the company is pacing itself in the drive to bet on more 'electrons' than 'molecules'.
"I'll be unequivocal here, we are fundamentally leaning in to develop the energy system of the future and we will do it profitably," he said, as carried by Energy Voice.
Patrick Pouyanne, CEO at TotalEnergies, said on an ADIPEC panel of executives moderated by CNBC, commenting on the widening divide in the debate about the future of fossil fuels.
"We will never make enough to please the ones which are against oil and gas, but my mission is not to please them."
"Our mission is to deliver to the society the energy we need today and tomorrow and for that I feel comfortable," Pouyanne added.
Tengku Muhammad Taufik, president and CEO of Malaysia's state oil and gas company Petronas, was also blunt, although he acknowledged that the industry needs to step up its decarbonization game.
"So, the debate has always been posed here, I'm reminded of an old saying: 'If you want to keep everyone happy, sell ice cream'," Taufik said.
"We are not in the business of ice cream — and I'm reminded, there are people who are lactose intolerant."
By Tsvetana Paraskova for Oilprice.com
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