20
INTERNATIONAL GROWTH & DIVERSIFICATION
By Tsvetana Paraskova
The Energy Sector Seeks International Growth and Diversification
Faced with uncertainty over future global oil and gas demand in the energy transition, many companies in the industry seek to strengthen their core businesses while diversifying into low-carbon energy sectors where their technological and operational competencies could shine.
and gas and the profits generated from it that will help fund the pledged growth in investment in renewables, transport electrification, hydrogen, and carbon capture technologies. The oil and gas supply chain, especially in the UK, is also looking to grow and diversify as it tries to navigate the challenges of the energy transition and the North Sea Transition Deal to slash emissions from one of the world’s most mature offshore basins.
Majors grow core assets and boost low-carbon energy investment
International oil and gas majors have started to invest more in low-carbon energy sources
The increased global focus on emissions reductions and technologies that could help the world achieve net-zero has prompted many energy firms to start thinking of allocating more capital to renewable energy and low-carbon energy solutions, expecting soaring demand for clean energy in the coming decades. In addition, the COVID-19 pandemic has highlighted, yet again, the volatile nature of the oil and gas prices and boom-andbust cycles, pushing more firms in the upstream and many in the supply chain to future-proof their revenues, profits, and operations with diversification into alternative energy sectors. Some of the world’s largest oil and gas firms – including bp, Shell, TotalEnergies, Equinor, Eni, and Repsol – have already pledged to become net-zero energy businesses by 2050. All those majors are set to invest growing shares of their capital budgets in low-carbon energy sources. They still prioritise core oil and gas projects and LNG and acknowledge that oil and gas will be needed for decades to come. But it will also be oil
www.ogv.energy I September 2021
International oil and gas majors have started to invest more in low-carbon energy sources, while developing their key profitable oil and gas assets. In recent weeks, bp and Shell, for example, have shown some of that diversification strategy of “performing while transforming,” as bp’s chief executive Bernard Looney says. bp started up in June the Manuel project in the US Gulf of Mexico, the fourth of five major projects it expects to delivered globally in 2021. Manuel includes a new subsea production system for two new wells tied into the Na Kika platform. The wells are expected to boost gross platform production by an estimated 20,100 barrels of oil equivalent a day (boe/d).
At the same time, bp teamed up with EnBW and submitted a bid in the ScotWind offshore wind lease. The consortium has applied for a lease area off the east coast of Scotland that could support offshore wind projects with 2.9 gigawatts (GW) generating capacity. Shell also bid in ScotWind—in a partnership with ScottishPower, the major proposes to develop the first large-scale floating offshore wind farms in the northeast of Scotland. Shell also announced at the end of July an agreement to buy Inspire Energy Capital LLC, a US renewable energy residential retailer with joint headquarters in Santa Monica, California, and Philadelphia, Pennsylvania. Also in the United States, Shell announced the final investment decision (FID) to develop the Whale deepwater oil project in the Gulf of Mexico. Whale, expected to begin production in 2024, is planned to reach peak production of around 100,000 boe/d and currently has an estimated recoverable resource volume of 490 million boe.
