Norway's state-controlled Equinor today provided further detail on its plan to "be a leading company in the energy transition", while also delivering strong financial returns and ensuring that it does "not leave valuable barrels behind".
"The energy transition needs to be a balanced transition. Oil and gas will play a role," chief executive Anders Opedal said, echoing other oil and gas company leaders. BP this week made a volte-face from an earlier pledge to reduce its hydrocarbons output.
Equinor "will continue to develop [its] profitable oil and gas portfolio", Opedal said. The company today reported a record profit of $28.74bn for 2022, more than three times higher than 2021, driven by higher energy prices globally. The firm's oil and gas output will be "on par with today" by the end of this decade, Opedal said, emphasising Equinor's role as a steady and reliable supplier, particularly of gas to Europe.
Although Equinor plans to continue producing hydrocarbons, it aims to cut its scope 1 and 2 emissions by 50pc by 2030, from a 2015 baseline, and has a target of a 40pc reduction in net carbon intensity by 2035. The latter includes scope 1, 2 and 3 emissions. It plans to put more than 30pc of its capital expenditure (capex) towards transition investment by 2025 and more than 50pc of capex towards the transition by the end of this decade.
Equinor made losses in its renewables segment of $63mn and $84mn in the fourth quarter of 2022 and the full year, respectively. But the renewables division is in its investing phase and the producing assets are generating money, Opedal said. Profitability is "at [the] core" for Equinor's renewables, he added.
New frontiers
"Recent policy development [in the US and EU] will strengthen the commercial potential" for carbon capture and storage (CCS), Opedal said. He sees returns for new technologies such as hydrogen in a similar range to renewables, although it is too early to give guidance, he cautioned. The economics will also be dependent on subsidies such as contracts for difference for hydrogen, and the emissions trading system (ETS) price for CCS, Opedal said.
"We will need subsidies, both for the CO2 value chains and the hydrogen value chains," said Equinor's executive vice-president for marketing, midstream and processing Irene Rummelhoff. But closer to 2030, "the EU ETS price is going to be higher than the cost of capturing and storing CO2, so then you get into a commercially-driven environment", and different returns on investment would be expected, she added.
Equinor, like Norway as a whole, is one of the earliest movers in CCS. It is a partner in the Northern Lights CO2 storage development in Norway, along with Shell and TotalEnergies. The first phase of Northern Lights storage is fully booked, Equinor noted. The company has several planned hydrogen projects, including the hydrogen co-firing project H2H Saltend with UK utility SSE, and a partnership with German utility RWE on hydrogen supply chains in Germany. Equinor should have 15mn-30mn t/yr of CO2 transport and storage capacity and 3-5 "clean hydrogen" projects, both by 2035.
