Major oil firms have warned that the existing dialogue around energy transition is not equitable, and called for the need to place the hydrocarbon industry in the driving seat in the world's decarbonisation efforts.
Speaking at the Middle East Oil, Gas and Geosciences Show (MEOS) in Bahrain, Chevron head of international operations Clay Neff said the discussion around energy transition is polarised and highlighted the need to strike a balance between energy affordability, energy reliability and sustainability, which the industry refers to as an ‘energy trilemma'. "Three billion people are still cooking off biomass while another one billion do not have access to electricity," Neff said. "With the population expected to grow to at least 10bn in the next 20 years, there is a need for a reliable energy to keep people out of poverty and improve the standard of living." Chevron said it supplies almost 60pc of the total gas consumed in Bangladesh and meets around 40pc of domestic gas needs in Nigeria.
But given the large contributions to global emissions, Chevron has come under pressure from governments and investors to keep a tab on their carbon footprint. "Chevron has a two-pronged approach — we will unapologetically increase oil and gas production because we know the world needs it, but at the same time, will reduce the carbon emissions from our operations", Neff said. The urgency to burnish climate credentials slowed down as investors shifted their focus back to energy security amid a surge in commodity prices triggered by the war in Ukraine. Like all producers in the region, Chevron also profited from the rally in crude prices and produced record oil and natural gas last year.
Saudi Aramco upstream executive president Nazir al-Naimi joined his industry peers in rejecting the view that transition from fossil fuels to clean energy can happen quickly. "Renewables make up only 7pc of the global energy mix and we are in a 100mn b/d system," he said. "To think that you can switch overnight is not realistic." Aramco is insistent on continuing to invest in crude capacity — boosting it to 13mn b/d from 12mn b/d by 2027. "When the world came back from the Covid lockdowns and when demand returned, it was only the fossil fuels industry that was able to shoulder all the needs of the world".
The heads of US oilfield service providers Halliburton and Baker Hughes called for "pragmatic energy reality that will not drive energy poverty". Oil and gas is critical to life and to believe anything else in an irresponsible narrative according to Halliburton chief executive Jeff Miller. Baker Hughes' Lorenzo Simonelli said energy abundancy is necessary and while all types of fuels are good, emissions from some can be tackled by scaling up existing technology. "Just by switching from coal to natural gas, the US and Europe were able to reduce emissions considerably", he said. "A recent study stated that technology which is available today can already achieve 40pc of the reduction required to meet the Paris accord".
The UN Cop 28 climate conference, which the UAE is hosting later this year, will be pivotal in showcasing how the industry can be an enabler of decarbonisation after being "unwelcomed" by Glasgow during Cop 26, Simonelli said. Major oil companies were barred from sponsorship deals and excluded from official roles at the climate summit. With the chief executive of the UAE's state-owned Adnoc, Sultan al-Jaber, at the helm, the industry expects to have a more balanced conversation. The "transition cannot be successful without the industry at the table", Chevron's Neff said.
"I think we should have a place at table that we didn't have. Hopefully the Cop 28 will have more room at the table, Aramco's al-Naimi said. "We have the deep pockets and have the know-how, the transition cannot happen without us at table."
