Oil and G a s to the Hydrocarbons: the hero of the hour? ISSUE 48 AUTUMN 2022 NUCLEAR South Korea bets on nuclear to solve energy and climate crisis ENERGY TRANSITION Oil and gas: The path to low-carbon operations POWER The future of gas-ﬁ red power generation in a net-zero world FROM THE ENERGY INDUSTRIES COUNCIL energy focus VIEW FROM THE TOP Tengku Muhammad Tauﬁ k, President and Group CEO, PETRONAS
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FROM THE EIC
From the Chief Executive
6 View from the top Tengku Muhammad Tauﬁk, President and Group Chief Executive Oﬃcer, PETRONAS
12 News and events
Updates from the EIC
14 The big question
How is the current push for energy security inﬂuencing your business?
16 Special report
Jonathan Dyble on the resurgence of oil and gas
38 My business
Roy Smith, Account Director for Europe Oil & Gas, Gurobi
20 Newfound sense of pragmatism reshapes oil and gas decarbonisation
James Richardson, Commercial Director for UK Industrial Decarbonisation, Baker Hughes
25 Can Norway call itself a leader of the energy transition?
Sverre Alvik, Programme Director Energy Transition, DN
16 Oil and gas to the rescue
26 Floating solar: The next big thing in clean energy?
Nabil Ahmed, Research Analyst, EIC
36 South Korea: Nuclear revival
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28 Opportunities in the Middle East
Ten g ku Muhammad Taufik
OIL AND GAS
28 EIC regional spotlight
Thinking of exporting to the Middle East?
30 Decarbonisation: a holistic approach to the UK’s energy system
Martin O’Neill, Head of Strategy, GE Gas Power
33 Making power grids t for the energy transition
Robert Denda, CEO, Gridspertise
20 Decarbonising oil and gas
36 South Korea returns to nuclear power
Joanne Sivanathan, Energy Analyst, EIC
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© 2022 The Energy Industries Council
Energy Focus is the oﬃcial magazine of the Energy Industries Council (EIC). Views expressed by contributors or advertisers are not necessarily those of the EIC or the editorial team. The EIC will accept no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this publication. Recycle your magazine’s plastic wrap – check your local LDPE facilities to find out how.
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Contents ISSUE 48 AUTUMN 2022
www.the-eic.com | energy focus 3
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From the Chief Executive:
It’s a real pleasure to welcome
Datuk Tengku Muhammad
speculate that European energy markets are broken and need a complete redesign.
industry worldwide – but it is also damaging for global politics.
President and Group Chief Executive Oﬃcer
of PETRONAS, as our guest for this edition’s View From The Top. It is a privilege to hear him share his thoughts on PETRONAS’ priorities, the current energy market and the shifting dynamics of diﬀerent technologies and pressures on the system.
PETRONAS’ reassuring tone that it still sees a key role for oil and gas in the energy mix of the future – something we continually hear from other national oil companies, too – is important, and marks a key point in time in which governments are now embracing the full energy mix as being key to aﬀordable, transitioning and secure energy markets. Beyond oil and gas, Mr Tauﬁk also elaborates on the company’s initiatives to continue exploring solutions for achieving net zero. I highly recommend readers take a look at this insightful piece.
More than six months have passed since Russia invaded Ukraine, and this remains a serious concern. The energy market in Europe right now faces diﬃculties that many describe as being the price of war, and unaﬀordable energy price increases are forcing governments across Europe to borrow heavily in order to explore the urgent need for further handouts for consumers and business owners – almost at the scale of COVID-19 handouts. Many now
This is an important reminder of how expensive, dangerous and destabilising war is. It is therefore encouraging to see that European leaders – supported by others around the world – are continuing to stand ﬁrm against Russian aggression.
At the EIC, our 2022 edition of the Survive & Thrive Insight Report has recently been published. This is the sixth year in which I have personally interviewed leaders of EIC member companies (this time 63 of them) to discover their inspiring strategies for growth in constantly changing and challenging markets. It’s a great opportunity not only for our members to share and show oﬀ their expertise, successes and lessons learnt, but also for readers to gain a unique perspective and grasp on our industry’s big picture.
The report reveals – frustratingly, but perhaps not surprisingly – that investments in new exports and internationalisation remain low. Indeed, this is the lowest of all growth strategies, used by only 16% of UK companies interviewed; just 5% of the non-UK companies have adopted new exportfocused investments. Energy businesses prefer to invest in domestic strategies –most notably in innovation, including via investment in digital and new technology.
Now, more than ever, it’s clear that the lack of focus on growing international trade is bad for business and bad for the
International trade is a powerful mechanism for building trust and relationships between companies and governments around the world. A trading world is a safer world. After the shocks of the 2014 oil crisis, Brexit, COVID-19 and war in Europe, companies are increasingly export-shy. This may accelerate mistrust between countries, making global security less predictable in the long term.
Our work at the EIC therefore becomes ever more important. We will continue to stick to our core purpose: helping members, businesses and governments to build stronger global partnerships and friendships that are built on trust, events and networks, and smart business decisions that use EIC data. We will support leaders to apply true entrepreneurial spirit in order to grow and diversify their businesses across all energy sectors, transition and adapt, and ultimately grow them, both at home and around the world.
Chief Executive Oﬃ cer, Energy Industries Council stuart.broadley @the-eic.com
www.the-eic.com | energy focus 5
In this edition Energy Focus examines the continuing role of oil and gas in the energy mix –ensuring continuity of supply during a time of conﬂict in Europe, and helping to smooth the transition to net zero. In light of this, boosting investment in trade and exports will be crucial for both growth and security.
View from the top
From the EIC
Tengku Muhammad Tauﬁk
Tengku Muhammad Taufi k, President and Group CEO of PETRONAS
6 energy focus | www.the-eic.com
It’s been two years since you took the helm of PETRONAS amid the global COVID-19 crisis. Since then, the world has witnessed gas and electricity prices surge in 2021 and the Ukrainian crisis in 2022. Looking back, what have been the most signiﬁcant developments for PETRONAS?
These signiﬁcant events have unfortunately introduced a fresh wave of uncertainties. They are unfortunate because the world at large is still grappling with an already uneven and extremely fragile post-pandemic recovery. We can now readily observe even more complex challenges driven by heightened concern over disruption in energy supply, in a market already facing structural supply issues. This has resulted in the cost of basic sustenance and even maintaining economic activity to escalate to record highs.
Even as we contend with this volatile period, PETRONAS’ priority will always be to ensure the security of energy supply for Malaysia and our customers around the world. In 2020 and 2021, we sustained total daily production average of 2.21MMBoe/d and 2.28MMBoe/d respectively, bearing testimony to the resilience of our operations.
Without any doubt on my part, it was the unwavering contribution and support of our people and partners that was the driving force that has enabled the group to weather the unavoidable challenges of operating during a pandemic, and this dedication has helped us emerge on a steadier footing to face possible shocks to the market. As a group, we will remain focused on safe and reliable operations, preserving value while pursuing proﬁtable growth. Even as we progress forward in the disciplined delivery of our Three-Pronged Growth Strategy, the overarching challenge of contending with climate change remains an enterprise imperative. To this end, PETRONAS will continue intensifying its sustainability
eﬀorts towards achieving the goal of net-zero carbon emissions by 2050. At the heart of these eﬀorts is the unwavering desire to fulﬁl our purpose: becoming a progressive energy and solutions partner, enriching lives for a sustainable future.
What are your plans for future growth, and where are the greatest risks and opportunities?
As a National Oil Company, PETRONAS recognises its role in maximising the value of Malaysia’s hydrocarbon resources. This responsibility is enshrined in the 1974 Act that brought us into being. It remains our duty to provide long-term economic value creation for shared prosperity and energy security. Equally important, the entire enterprise is now embracing its role to support the low-carbon ambitions of Malaysia and the countries in which we operate.
To survive and thrive, PETRONAS has no choice but to build a resilient portfolio – one where oil and gas still remain its core businesses. However, leveraging our capabilities as an integrated energy player, we have expanded this portfolio to integrate renewables and lower-carbon solutions, as well as speciality chemicals. Simultaneously, PETRONAS is also actively exploring hydrogen as an alternative energy source – one that can complement natural gas and renewables.
In June, PETRONAS embarked on its next phase of growth to scale its new energy business with the launch of GENTARI. The new, independent entity will focus fully on cleaner energy solutions to capture opportunities in the energy transition alongside our core portfolio. This entity will provide customers with lower-carbon solutions in three core oﬀerings – Renewables, Hydrogen and Green Mobility.
As hydrocarbons will continue to be an important component of our
About Tengku Muhammad Taufik
Tengku Muhammad Tauﬁk was appointed President and Group CEO of PETRONAS in July 2020, having previously served as the company’s EVP and Group CFO from 2018. He has more than 20 years’ experience in strategic planning, ﬁnance and business strategy development, focusing on the oil and gas and energy industry. Before joining PETRONAS he was a partner at PwC Malaysia. He was also previously group CFO at SapuraKencana Petroleum Bhd (now Sapura Energy Bhd) and deputy CFO at Tanjong plc. Tengku Tauﬁk holds a BA (Hons) Degree in Finance and Accounting from Strathclyde University, Glasgow. He is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Accountants.
Taufik talks to Energy Focus about the many sustainable diversiﬁcation projects that PETRONAS is undertaking – while also, crucially, remaining true to its core oil and gas business
the EIC www.the-eic.com | energy focus 7
Q&A Tengku Muhammad Tauﬁk:
To survive and thrive, PETRONAS has no choice but to build a resilient portfolio –one where oil and gas still remain its core business
portfolio, PETRONAS has also set up a centralised Carbon Management Unit to provide focus in accelerating our decarbonisation eﬀorts across the entire integrated value chain. The Unit will manage a carbon storage portfolio for emissions produced by our operations, with the near-to-medium-term aim of establishing a regional storage hub for carbon emissions as a new revenue generator.
With the strength and reliability of our core portfolio, combined with our new suite of oﬀerings, PETRONAS aspires to provide its customers with an ‘energy superstore’: one that powers businesses and fuels progress in a just and sustainable manner.
What is your view on the importance of oil and gas in the drive to net zero and the role of liqueﬁed natural gas (LNG) in the future energy mix? How can the industry stay ahead of tomorrow’s energy demand?
PETRONAS will stand guided by the science-based evidence detailed by the Intergovernmental Panel on Climate Change. The evidence points out that the world must cut its total emissions by 45% by 2030. However, we believe there is no one clear pathway to reach net zero, rather an evolutionary approach of continuous improvements is needed – particularly in addressing emissions.
In discharging our responsibility as an energy company, PETRONAS’ priority is to balance these considerations while ensuring energy supply remains not only aﬀordable, but also secure and, now more importantly than ever, sustainable.
Oil and gas will still contribute to the energy mix as economies recover. We believe that such growth will see gas and LNG making up a signiﬁcant portion as the most resilient among fossil fuels. It remains a viable, lower-carbon source of energy that is economically competitive within the energy mix, and is eminently suited to complement renewables.
Critically, gas and LNG both oﬀer a pathway to reduce coal dependence and emissions from hard-to-abate sectors in emerging economies globally – and in Southeast Asia speciﬁcally.
Collectively, as an industry, we must present ourselves as part of the solution.
We must continue to tap the full potential of the technologies at our disposal to reduce carbon emissions from existing production, incorporate carbon capture to our production methods, or move towards zero-carbon production.
Addressing how we manage our carbon footprint, even as we develop new sources of lower-carbon energy, is an urgent and critical imperative. Under any scenario, oil and gas retains a signiﬁcant share of the global energy mix in the coming decades, and investments are still necessary to cater to future demand – particularly in the petrochemicals sector. These eﬀorts will determine the right portfolio to ensure stability and sustainability of the energy
system for the generations that will come after us.
The balancing act between security and reliability of supply, aﬀordability and sustainability is clearly at the forefront of industry considerations today. What is the long-term solution?
PETRONAS’ priority will always be to manage this delicate balancing act by providing energy that is clean, reliable and aﬀordable, while rallying support to shape an ecosystem that will enable a responsible and just transition.
In the context of developing countries and emerging economies, we must be realistic and practical in our approach. Eﬀorts must be responsibly orchestrated by all stakeholders to ensure equitable outcomes. Striking the right balance between economic development while addressing the urgency for climate action and maintaining reliable and secure energy access can only be done through appropriate policy and regulation. To this end, policies that help reduce risk in making investment commitments, foster sustainable supply chain development, create incentives for clean energy projects and facilitate technological partnerships in creating innovative sustainability solutions will be absolutely pivotal.
These eﬀorts will necessitate an all-in commitment by multiple stakeholders. In Malaysia, PETRONAS continues to support initiatives that promote public-private collaboration with government agencies and government-linked organisations to create a secure, sustainable, aﬀordable and inclusive future energy system for Malaysia.
PETRONAS is also a member of the World Economic Forum’s Oil and Gas Governors community and the Association of Southeast Asian Nations (ASEAN) Council on Petroleum, which convenes industry leaders to collaborate in shaping an ecosystem that supports a just and responsible energy transition.
PETRONAS is developing a major carbon capture and storage (CCS) project linked to the Kasawari project. What are some of the challenges and opportunities in developing such a major project?
Critically, oil and gas both oﬀer a pathway to reduce coal dependence and emissions from hard-to-abate sectors in emerging economies globally – and in Southeast Asia speciﬁcally
8 energy focus | www.the-eic.com
(Below) PFLNG DUA, PETRONAS’ second deepwater ﬂoating LNG facility, is able to produce 1.5m tonnes of LNG per annum
Q&A Tengku Muhammad Tauﬁk
CCS is part of PETRONAS’ eﬀorts in building a sustainable portfolio with innovative solutions to produce energy responsibly, supporting the transition to a lower-carbon future through collaborative eﬀorts with industry partners.
The Kasawari CCS project is in the Front End Engineering Design competition phase, which is expected to be completed in Q3 2022. The project is on track to achieve Final Investment Decision by Q4 2022.
Can you tell us more about PETRONAS’ long-term strategy for petrochemicals and reﬁning, nationally and internationally?
Our chemicals arm, PETRONAS Chemicals Group Bhd (PCG), is pursuing its two-pronged strategy – to sustain strength in basic petrochemicals, and to selectively diversify into derivatives, speciality chemicals and solutions.
Malaysia and Southeast Asia remain the home and predominant export markets for our commodity products as we continue to leverage our competitive edge. We are encouraged and excited by the new volumes coming from PRefChem, which we envisage will strengthen our position as the region’s leading integrated producer.
The recent acquisitions of BRB and Perstorp support PCG’s aspirations to grow the speciality chemicals portfolio, as we explore various opportunities in speciality chemicals that are margindriven, focused on growing end markets like food and feed, industrial additives and personal care.
PCG also pursues sustainability-related projects to help achieve net zero by 2050 and a circular economy, aligned with global concern on climate change and changing demands for sustainable products and solutions. We are also actively undertaking feasibility studies that explore converting waste into energy, as well as plastic waste collection and its chemical recycling in supporting circular economies.
For reﬁning, PETRONAS believes reﬁneries that are integrated with petrochemicals can remain competitive. However, there is a need to ensure these reﬁneries and petrochemical complexes deliver customer-centric products and solutions by going further down the value chain.
Eﬀorts in the reﬁning business also include focus on decarbonisation strategy in line with our Net Zero Carbon Emissions 2050 target – and it goes without saying that one of the focus areas must include biofuels. As the region, which is foreseen to be the world’s growth engine, Asia presents immense growth potential, given the burgeoning of middle-class consumer markets and a more aﬄuent population that we expect to continue driving demand. This demographic prefers an increasingly urban lifestyle, compelling an increase in spending beyond basic amenities and thus creating a large consumer market for reﬁned oil products and petrochemicals – especially speciality products.
We also see changes in social habits post-pandemic – more time spent by the world’s working population at home, coupled with intensifying competition in medical products and pharmaceuticals, food, personal care and consumption of household supplies. This will be accompanied by quantum leaps in adoption of digital solutions and the embracing of
technology. To this end, we will continue to focus on creating value from our existing business portfolio by increasingly oﬀering customer-centric solutions even as we explore other areas of growth.
PETRONAS aims to achieve zero net growth in its operational emissions by 2050 and cap greenhouse gas emissions from its operations in Malaysia at 49.5mt of CO2e by 2024. How will you achieve this, how much investment will be needed, and will you be setting any interim targets?
PETRONAS has allocated approximately 10% of RM60bn (US$13.38bn) CAPEX allocation for FY2022 earmarked for non-traditional businesses in pursuit of achieving our net-zero aspiration. In 2021, close to RM1bn (US$223m) of CAPEX was spent on stepping out beyond our core business, mainly on renewables.
Some of the eﬀorts undertaken to reduce Scopes 1 and 2 greenhouse gas emissions from assets include minimising venting and ﬂaring from our operations, building on
(Right) Night view of Pengerang Integrated Complex, Johor, Malaysia – among the biggest integrated petrochemical facilities in the region
www.the-eic.com | energy focus 9
Q&A Tengku Muhammad Tauﬁk: From the EIC
Malaysia is one of the signatory countries that pledged to slash global methane emissions by at least 30% from 2020 levels by 2030. How will PETRONAS reduce the methane content of its gas operations, and how will it help its global industry partners address methane emissions?
PETRONAS is committed to expediting our emissions reduction, including a speciﬁc focus on methane emissions. To this end, the group has endorsed the World
Bank’s Zero Routine Flaring by 2030 Initiative, which aims to end routine ﬂaring of associated gas from our oil production. As a start, we have achieved zero continuous venting and ﬂaring from the Bokor and Betty ﬁelds oﬀshore Sarawak.
PETRONAS also continues to assess opportunities to help strengthen policies and regulations for ﬂaring and oil and gas methane reductions, and to cooperate with partners on best practices for measurement, reporting and veriﬁcation of oil and gas methane emissions in support of the Global Methane Pledge.
We are also signatory to the international Methane Guiding Principles initiative that commit to improve emissions performance of our operations and the gas supply chain, improve accuracy of methane data, advocate for sound methane policy and increase transparency in reporting.
PETRONAS recently hosted the ASEAN Energy Sector Methane Roundtable 2022
with key energy players to intensify the region’s collaboration on methane emissions management by leveraging collective capabilities, global best practices and actionable insights.
PETRONAS has renamed its Gas and New Energy business GENTARI and created a new carbon management unit. What are your plans for moving into new energy sectors? What are the challenges, and how will they be overcome?
GENTARI was established to accelerate the adoption and commercialisation of clean energy.
The entity aims to deliver a suite of renewable energy, hydrogen and green mobility solutions that are safe, responsible, cost-optimised, and emissionsabated by applying an integrated approach across the clean energy value chain for customers globally.
(Below) Amplus Solar, a member of PETRONAS Group, has commissioned a solar farm of 175MW at Gadag, Karnataka. This is India’s largest solar farm, supplying power exclusively to more than 30 industrial and commercial customers using the state grid transmission system under an open access route 10 energy focus | www.the-eic.com
the EIC: Q&A Tengku Muhammad Tauﬁk
operational strength to improve the energy eﬃciency of our operations, and considering lower-carbon solutions or renewable electricity to power operational processes, where possible. We also aim to accelerate the development of CCS and use nature-based solutions to remove and oﬀset residual hard-to-abate emissions in the longer term.
Long-term, GENTARI aims to be an integrated net-zero solutions provider, creating greater value, connecting businesses and making the journey to net zero simpler. We hope to connect and collaborate with like-minded entities to achieve greater results.
While PETRONAS is also addressing the energy transition with diﬀerentiated gas oﬀerings, at the same time it is intensifying its decarbonisation eﬀorts, where it has set up a centralised carbon management unit that will focus on managing emissions across its entire integrated value chain. An area we are keen to increase collaboration is in CCS technology for our carbon storage capacity, which can establish Malaysia as a regional CCS solutions hub.
The Carbon Management Division was formed in March 2022 to build and develop the CCS industry in Malaysia, leveraging the country’s natural geological advantages.
PETRONAS has collaborated with global shipping company Mitsui O.S.K. Lines, JAPEX, Sarawak Shell, ExxonMobil, Mitsui and South Korean companies POSCO, Samsung, GS Energy, Lotte Chemical and SK Group to explore CCS opportunities. These partnerships will leverage each other’s experience and knowledge along the CCS value chain in progressing the CCS ecosystem as a new growth area for PETRONAS. We believe that CCS will be key response to the energy transition for Malaysia and the region.
What is needed from governments, the oil and gas industry, its supply chain and its consumers to create the conﬁdence to invest in and grow low-carbon businesses at scale?
The shift towards a lower-carbon future will require eﬀective, systematic and coordinated action from all stakeholders –including industry, legislators and the investing community.
The focus must be on a ‘just and responsible’ transition – not only providing cleaner energy but also making sure that everyone has access to it, and that it is aﬀordable to all. Concerted eﬀorts from all constituents, society and governments are crucial in setting the right priorities and navigating the energy transition, and
balancing the trilemma of energy security, aﬀordability and environmental sustainability. Towards this, a key enabler lies in establishing robust policies and ﬁnancing frameworks that will support the growth of low-carbon businesses.
We need to shift the mindset and turn what we have traditionally perceived as risks into commercial opportunities in the low-carbon economy and chart a future through greener growth.
Where is PETRONAS on its digital transformation journey and how are you building your workforce for a digitalised future?
PETRONAS has long been laying the groundwork for the ongoing digital revolution. We have invested in the fundamental building blocks for digital growth, like connectivity, cloud, security, data enablement and analytics.
We provide opportunities to digital talents to develop their skillsets – a portfolio of technical skills and knowledge to create a more versatile digital workforce, regardless of their starting points. There are upskilling and reskilling programmes in place to support our people as they transition into their future roles.
Apart from these digital initiatives, we are also accelerating skills-based education and programmes in collaboration with Universiti Teknologi PETRONAS to connect learners to job pathways more easily.
Changing an organisation’s culture is one of the most diﬃcult leadership challenges. Despite a long history in oil and gas, the culture in PETRONAS is changing. How have you balanced technology, culture, and strategy for successful execution? Uncompromising integrity is part of our DNA and must continue to deﬁne the PETRONAS executive for as long as we are in existence. To this end, PETRONAS will continue to uphold the highest standards of governance and integrity for the wellbeing of the organisation, and we continue to be governed by frameworks and policies aimed at maintaining a robust culture of integrity and compliance. Our employees are guided by our timeless shared values and the constant challenge is to make sure they live up to our culture: anchored around courage, entrepreneurship, innovation and customer-centricity. These are universally applicable across core and growth areas.
Getting the right balance between the three (technology, culture and strategy) is key – PETRONAS sees innovation and technology as the necessary foundations as oil and gas will remain our core business. This balance will continuously evolve as we journey along an increasingly greener pathway by integrating renewables and lower-carbon solutions, as well as speciality chemicals, into our portfolio. We will remain steadfast in executing our Three-Pronged Growth Strategy by maximising value from cash-generating assets while we expand our core business areas, and embark on step-outs into the new areas I shared earlier. Nonetheless, it is the culture which will ultimately determine how successful we will be in executing these plans. As with all transformations, culture change is a journey and a process. Accordingly, as an employer, PETRONAS will continue to place clear emphasis on creating the kind of experience that encourages and reinforces behaviours in line with our culture. This takes consistent, persistent role-modelling management, consciously creating the psychological safety for people to behave diﬀerently, and acknowledging the small wins where things are changing. Ultimately, every member of the PETRONAS family has a part to play in creating the ecosystem that we want.
We need to shift the mindset and turn what we have traditionally perceived as risks into commercial opportunities in the low-carbon economy and chart a future through greener growth
www.the-eic.com | energy focus 11
Q&A Tengku Muhammad Tauﬁk: From the EIC
Conferences from EIC coming up in 2022
Hydrogen ConferenceTechnology & Expo Europe
When: 19–20 October 2022
Location: Bremen, Germany
About the EIC
Established in 1943, the EIC is the leading trade association for companies working in the global energy industries.
Our member companies, who supply goods and services across the oil and gas, power, nuclear and renewables sectors, have the experience and expertise that operators and contractors require. As a not-for-proﬁt organisation with oﬃces in key international locations, the EIC’s role is to help members maximise commercial opportunities worldwide.
EIC LIVE events
Now that more than half of the year is gone and restrictions related to the pandemic are being continuously eased worldwide, the EIC is glad to still be present in numerous in-person conferences and exhibitions.
After successfully delivering our ﬂagship event, the Energy Exports Conference, in June, we have many more coming up, including EIC-organised UK Pavilions in events from Germany, the UAE and Singapore. You can learn more about these on the right.
To discover other upcoming events, including webinars, check out our calendar at: www. the-eic.com/Events/Calendar
Why attend? The Hydrogen Technology Conference & Expo Europe is a solutionsdriven forum that will explore the technical and ﬁnancial obstacles hydrogen must overcome to become part of a deeply decarbonised, deeply renewable energy system. It also considers the new technologies necessary to achieve this.
This must-attend event will bring together the entire supply chain to discuss everything from technologies and solutions for low-carbon hydrogen production, eﬃcient storage, transport and infrastructure to advanced design, testing and development, manufacturing solutions and advanced materials for hydrogen fuel cells.
The EIC will be organising the UK Pavilion at the event. If you are interested in exhibiting with us or want more information, contact the International Trade Team by emailing email@example.com.
Visit www.the-eic.com/Events/ Exhibitions/HydrogenTechnology ExpoEurope
Abu Dhabi International Petroleum Exhibition and Conference
When: 31 October–3 November 2022
Location: Abu Dhabi, UAE
Why attend? ADIPEC has become one of the world’s most inﬂuential energy events
12 energy focus | www.the-eic.com
UPDATES FROM THE ENERGY INDUSTRIES COUNCIL
Marina Bay Sands, Singapore will host Offshore South East Asia 2022
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EIC Insight Report: Survive & Thrive VI
and an important meeting place where professionals convene to engage with and identify the opportunities that will unlock new value in an evolving energy landscape.
With 80% of attendees being a decisionmaker, purchaser or inﬂuencer, ADIPEC is an exceptional opportunity for businesses to network with existing and new customers and review the services, products and solutions that will enhance performance, increase eﬃciencies and optimise costs.
Having taken part in ADIPEC for more than 20 years, it is with pleasure that the EIC returns to ADIPEC to host the UK Pavilion. If you are interested in exhibiting with us or want more information, contact the International Trade Team by emailing firstname.lastname@example.org.
Visit www.the-eic.com/Events/ Exhibitions/ADIPEC2022
Oﬀshore South East Asia (OSEA) 2022
When: 15–17 November 2022
Location: Marina Bay Sands, Singapore
Why attend? Oﬀshore South East Asia (OSEA) returns to Singapore in 2022 as an in-person event at the forefront of oﬀshore oil, gas and emerging zero-carbon energy sources, pioneering a global shift in the energy industry. Embracing decarbonisation and digitalisation, a refreshed tradeshow and conference will keep the focus on developments in oil and gas and also showcase opportunities in oﬀshore wind and hydrogen.
As the energy transition takes hold and the industry prepares to pivot, so will OSEA. Oil and gas companies will exhibit
alongside wind power project developers, EPC, ﬁeld operators, equipment providers, technology, digitalisation and decarbonisation companies.
The UK Pavilion will be managed by the EIC. If you are interested in exhibiting with us or want more information, contact the International Trade Team by emailing email@example.com. Visit www.the-eic.com/Events/ Exhibitions/ADIPEC2022
External aﬀ airs
We have had numerous engagements with key stakeholders recently as we moved on from the North Sea Decarbonisation Conference to the Energy Exports Conference. The team liaised with many key politicians to make sure that supply chain asks and the ability to engage with global opportunities are fully recognised. With the publication of Survive and Thrive VI, the policy asks of governments have become sharper, and we are engaging more heavily with our members to ensure that we are properly reﬂecting your views and looking for your engagement.
Our discussions have ranged from environmental, social and governance issues to export opportunities and the out-of-sync policies that are currently in play. We have open consultations on nuclear, and are looking at and engaging with the Energy Security Bill.
Please feel free to contact us and discuss any policy, government or communications questions – we are always happy to talk. Contact: Rebecca Groundwater, Head of External Aﬀairs Rebecca.Groundwater@the-eic.com
The sixth edition of our Survive & Thrive report provides insights on the state of the energy industry, based on extensive interviews with the leaders and senior executives of 63 energy supply chain companies from around the world.
The report shows that, following a heavy focus on diversiﬁcation and energy transition during the past two years –including a drive for renewables – in 2022, energy companies are now shifting gears back to investment in oil and gas. This is in response to recent geopolitical events resulting from Russia’s invasion of Ukraine, as well as challenges around the delay of energy transition initiatives and attractive higher margins from more lucrative oil and gas projects.
Read the full report for free and ﬁnd out more about how our members continue to thrive, innovate, grow and share their expertise and lessons in a constantly changing market.
To buy or download your copy of these reports, please visit: www.the-eic.com/MediaCentre/ Publications/SurviveandThrive
From the EIC News and events www.the-eic.com | energy focus 13
The BIG question
How is the current push for energy security influencing your business?
Following a year that was laser-focused on energy transition, 2022 has seen energy security rise to the top of policymakers’ priority lists. With yet another energy pivot, how is this change aﬀecting EIC members?
Energy Focus puts the big question to four members
CEO at Alderley
It has taken a global energy security crisis for us to recognise the true value of the energy that drives our economies and makes our lives possible.
Hydrocarbons are once again valued for the reliable, aﬀordable, ‘always-on’ energy they provide. In addition to nuclear, renewables and emerging complementary technologies such as hydrogen, they are central to a balanced energy portfolio.
We welcome recent UK government commitments to refocus on the North Sea and seek secure homegrown energy sources. This reﬂects a common-sense approach in diﬃcult times, without forgetting the long-term goal of net-zero by 2050. However, to make this happen, we need to elevate the UK supply chain’s importance and role, which must be supported to compete for the new opportunities emerging in the domestic energy sector.
Alderley has invested in new capabilities to equip us and our clients for the new market reality. We’ve invested in digital,
consultancy and aftermarket services to improve energy assets’ eﬃciency and performance, and have launched a training centre at our HQ in the South West to develop the next generation of talent.
If we are to build a new vision for UK energy, we must prioritise British content that will enable the country’s supply chain to reinvest future proﬁts into a skilled and talented new workforce that can tackle the energy challenges of the mid-21st century.
Alderley provides end-to-end integrated
solutions for the global energy industry, helping clients to meet the challenges and needs of an energy system in transition. The company maximises the value and eﬃciency of its clients’
energy assets – from concept to operation and beyond – through its advanced consultancy, digital, systems and projects, aftermarket services and training solutions.
Managing Director at Cokebusters
There are two competing factors: the resurgence of hydrocarbon demand, and delays to planned turnaround work, due to production demands. Cokebusters has started a journey of diversiﬁcation. However, as downstream manufacturing services are a core feature of the business, we are able to react to increased demand.
Despite challenges to the global supply chain and workforce availability, customers of such services continue to try and hold prices down, even against a backdrop of reduced availability. While this supports income, it creates stress on cost control.
During the pandemic, many maintenance turnarounds were pushed out to later dates due to reductions in workforce mobility. Maintenance was based on criticality only.
14 energy focus | www.the-eic.com From the EIC Members’ comment
We welcome recent UK government commitments to refocus on the North Sea
As the pandemic wound down, we realised the scale of the backlog. Thereafter, the consequences of energy price rises and supply threats created something of a stall, with many operators deferring maintenance again to sustain and increase production. The consequences of these decisions, while understandable, will serve to not only create a greater backlog, but possibly also a threat to integrity and productivity.
Cokebusters provides innovative technology services for the energy sector, with its headquarters in the UK, a regional oﬃce in the US and a global partnership network. It deploys purpose-built equipment and skilled labour to decoke/descale complex heat exchanger tubing systems on petrochemical and power generation complexes, and also develops and deploys patented intelligent pigs to inspect and provide integrity status of the same.
Managing Director at Re-Gen Robotics
There is consensus in the industry that the expected increase in demand by 2050 cannot be met with today’s renewable technologies alone, and that fossil fuels will continue to play a role. This is compounded by supply disruptions triggered by the Russia-Ukraine war.
In the short term, a small number of tank cleans have been delayed to bolster supply, but most continue regardless. Our system can be adapted to suit individual client needs and timeframes, providing safer, faster and cheaper tank cleaning, along
with intelligent in-reporting capabilities to evaluate and improve the process in future.
Following every clean, clients receive CCTV and intelligent performance reporting that monitors energy consumption and waste generation – vital for conserving funds and running a cleaner, greener business. Many oil companies are investing in technologies to improve eﬃciency, carbon intensity and economics across their portfolios. The entire industry is going through a shift involving new modes of green fuel that could be stored.
Innovation and agility are part of our DNA, and we are ready to meet customers’ needs to develop new cleaning technologies and processes, dictated by changes that may come from the materials they store.
Re-Gen Robotics is a Zone 0, EX certiﬁed, remote controlled ‘no man entry’ robotic tank cleaning company. Its self-contained system includes vacuum, jetting, cranage and robotics. Fully submersible robots are designed to operate in the most inhospitable environments, and with specialised access cranes, remote camera systems and engineering expertise, any tank size or shape can be cleaned.
Operations Director and General Manager at Serck
All economies require energy to produce goods and services and provide humans with social and economic wellbeing and development. As such, energy is a critical resource, and energy security is a priority for many
governments worldwide. The current high energy prices, energy demand and supply line disruptions have highlighted this even more.
Both developed and developing countries face numerous energy challenges, including inadequate and unsuitable energy sources, energy supply uncertainties, high and ﬂuctuating prices of energy, and environmental pollution and degradation due to the production, distribution and use of energy.
These factors have led to rising raw material prices, longer lead times, shorter validity periods and material scarcity, resulting in higher costs and longer delivery times – which are ultimately passed down through the supply chain.
Projects are coming under scrutiny as rapidly increasing costs cause budget overruns. The supply chain is also under increasing strain due to shipping delays, which are disrupting manufacturing processes and schedules.
The push for energy security has put into sharp focus the need for governments to become more self-reliant in energy needs; this will hopefully result in new local projects to meet these needs.
Serck is a heat exchanger service provider and manufacturer, servicing the oil, gas, petrochemical, nuclear, process, power and water industries. It also provides technical and repair/refurbishment support services, with specialist welding of exotic materials including titanium, inconel and super duplex. For plant maintenance and turnaround projects, Serck specialises in design engineering, manufacture, fabrication, repair, refurbishment, hydro-jet, chemical and foam cleaning of shell and tube heat exchangers.
During the pandemic, many maintenance turnarounds were pushed out to later date
Projects are coming under scrutiny as rapidly increasing costs cause budget overruns
www.the-eic.com | energy focus 15 Members’ comment: From the EIC
Innovation and agility are part of our DNA, and we are ready to meet the needs of our existing and new customers
Oil and G a s to the
Special report Energy security 16 energy focus | www.the-eic.com
Amid extreme uncertainty and volatility, oil and gas still have a vital role to play in meeting our present energy needs, says Jonathan Dyble
The debate over oil and gas production has reignited in recent months. Countries around the world are facing a deepening energy crisis, exacerbated by a perfect storm of geopolitical turmoil, supply disruptions, high prices and an as-yet-unrealised energy transition.
Europe, in particular, is fronting up to extreme uncertainty. The region has typically relied on Russia for 30% of its oil and 40% of its natural gas imports – supplies that are looking increasingly insecure as tensions grow and sanctions bite following the country’s invasion of Ukraine.
Russia has gradually been cutting its energy supply to Europe for more than a year. Flows through its three main pipeline routes to the rest of the continent were 20% lower in H2 2021 than H2 2020, causing European gas prices to surge as demand spiked due to economies restarting after pandemic shutdowns.
The situation has only worsened in 2022. Under the pressure of European sanctions, Russia cut gas ﬂows to energy suppliers in several countries that refused to make payments in roubles, including Poland, the Netherlands, Bulgaria, Denmark and Shell in Germany. And while many did adhere, they have since suﬀered from reduced supply as Russia cut the capacity of the Nord Stream 1 pipeline by as much as 60% on 15 June.
North Sea energy boost
Located 125km northwest of the Shetland Islands oﬀ the shore of the UK, the Cambo oilﬁeld is one of the deepest ﬁelds ever discovered in Northern Europe. It is estimated to contain more than 800m barrels of oil equivalent (MMboe).
Jackdaw is a gas condensate ﬁeld 100% owned and operated by Shell. Located
As a result, gas ﬂows from Russia’s three main pipelines were down 26% month-on-month in June 2022, sending European gas prices spiralling further. Indeed, it is no coincidence that the Eurozone’s 19 countries hit record annual inﬂation, up from 8.1% in May to 8.6% in June.
Addressing the energy crisis
Against this backdrop of uncertainty, energy security has soared to the top of the agenda. “I think energy security has been overlooked for the last ﬁve years, maybe even 10 years,” aﬃrms Mark Lamyman, International Business Development Manager at AFGlobal. “But now, with what’s happened with Russia and Ukraine, certainly in Europe, I think it’s highlighted the need for energy security, and I think a lot of governments have had to rethink their model of how they get energy.”
The EU has committed to ending reliance on Russian fossil fuels by 2027, looking for alternatives such as liqueﬁed natural gas (LNG), imports of which rose 58% in the ﬁrst ﬁve months of 2022 compared with 2021 levels. However, with a limited number of import terminals, Europe has limited capacity to receive LNG.
Renewable energy has been another option, but is still limited in its overall contribution to the energy mix in many markets. In the UK, for example, wind farms were producing just 3.3% of the country’s electricity on 11 July, with gas-ﬁred power plants producing 47.6%.
in the Central North Sea, 250km east of Aberdeen, it is estimated to hold reserves of between 120–250 MMboe.
Following the approval of Shell’s Jackdaw ﬁeld, ﬁve other key North Sea ﬁelds are expected to be given approval to begin drilling as part of the UK’s drive to boost supply and lower energy costs. Their combined reserves – Rosebank, Marigold, Brodick, Catcher, Tolmount East and Jackdaw – are estimated to be 62m tonnes of oil equivalent.
www.the-eic.com | energy focus 17 Energy security: Special report
Energy security has been overlooked for the last ﬁve years, maybe even 10 years. But now, with what’s happened with Russia and Ukraine, governments have had to rethink their model of how they get energy
Mark Lamyman, International Business Development Manager, AFGlobal
To boost energy security prospects, several new oil and gas projects are being fast-tracked.
“The oil and gas market is obviously more established,” says Lamyman. “We’ve already got many supply chain players working within oil and gas, so I think it’s more attractive because there are a lot of projects and they’re easier to access. Equally, I am familiar with companies who’ve explained to me that to get into renewables as a supplier is diﬃcult and, again, it’s a new technology that carries more risks.”
Plans for 20 new gas import terminals across Europe have been either announced or accelerated since the Ukraine war began, including Germany earmarking US$3bn for four ﬂoating terminals – the country has no such infrastructure at present.
Examples include multi-million-dollar investments in LNG-receiving terminals at the Brunsbüttel and Lubmin in Germany and Eemshaven in the Netherlands – the latter of which has been revived after more than 10 years of inactivity. In Romania, Black Sea Oil & Gas is pressing ahead to be the ﬁrst company to tap the country’s oﬀshore gas ﬁelds.
Pipelines are also an issue that is being looked at. Even with more capacity to receive shipments of LNG, the continent still lacks the infrastructure required to transport it to where it might be needed.
These trade networks are vital, but the continent must also ramp up its domestic production capacity to become more selfsuﬃcient. Indeed, with the worrying possibility of blackouts in Europe growing ever stronger, projects such as Jackdaw and Cambo are being implemented.
Varied goals can be achieved with a diverse energy mix
The licence extension of Cambo on 30 March 2022 and approval of Jackdaw on 1 June 2022 have been met with controversy and debate.
On one side of the fence, such projects are deemed vital to improving energy security in the near-to-medium term, providing an improved social licence to run them. On the other, climate scepticism has been prevalent, demonstrated by the impassioned ‘Stop Cambo’ and ‘Stop Jackdaw’ campaigns from opponents both prior to and after approvals.
The question therefore lies in whether such projects can be rolled out to meet energy security needs in the immediate future without adversely impacting climate goals.
For James Phipps, Managing Director at Cokebusters, it is almost unavoidable for governments to pursue these projects in beating the energy crisis. With potential winter rationing plans being considered and consumers potentially set to be paid for not using energy at peak times, the need is clear.
“All governments have a number of primary national responsibilities including such things as health, physical security, employment, economic prosperity and, of course, energy security,” Phipps aﬃrms. “The UK has a continental shelf which contains sources of proven hydrocarbons. The safe and appropriate extraction of such will serve to satisfy many parts of this agenda and others. To ignore is arguably a dereliction of duty.”
Phipps also argues that while oil and gas has a reputation for being ‘dirty’, many industry technologies have advanced to the point that such fuels can be stored and used in a much cleaner manner.
Looking at Jackdaw, such improvements are evident. Shell explains that, at its peak, the project is anticipated to deliver 6.5% of UKCS gas production for less than 1% of UKCS emissions, while producing enough energy to heat more than 1.4m UK homes. Further, looking at the UK’s climate targets, Jackdaw’s emissions are expected to account for just 0.013% of the UK’s Fifth Carbon Budget between 2028 and 2032. This is an interesting point, given the debate
Special report: Energy security
We currently don’t have the capacity and technology to meet the energy needs in a fully sustainable way. Therefore, it is important that we speed up the investment levels and raise the awareness of this important paradox
Torben Harring, CEO, RelyOn Nutec
18 energy focus | www.the-eic.com
Europe’s race for LNG
Since the beginning of the war in Ukraine, EICDataStream lists 17 projects that have been announced, or were relaunched or accelerated, adding a total of 104.1bn cubic metres (Bcm) of LNG per year.
surrounding the true cleanliness of renewables technologies.
Phipps continues: “The impact of the production of EV batteries, wind turbines and solar panels, as well as the means to transport and construct them, is not insigniﬁcant. The production of modern EV batteries, for example, requires signiﬁcant amounts of precious metals.
“The more complex the ore, the more energy will be needed to extract, and many of these processes can be toxic and polluting. We should therefore accept that there are pros, cons and unwanted by-products associated with all forms of energy.”
Both Lamyman and Phipps agree that a sustainable and just energy transition which works towards achieving both climate protection and energy security
must comprise a diverse energy mix – a view that Torben Harring, CEO at RelyOn Nutec agrees with. Asked what a sustainable energy transition should look like, he makes it clear that energy security and climate protection must be achieved in harmony.
“It must be the ambition to have a world where secure energy sources and climate protection are not opposites of each other,” he says. “We currently don’t have the capacity and technology to meet the energy needs in a fully sustainable way. Therefore, it is important that we speed up the investment levels and raise the awareness of this important paradox.
“While we hope for a fast, sustainable energy transition, we can’t allow that speed will compromise energy security or safety of the people working in the energy industries for that matter.”
Energy security: Special report: www.the-eic.com | energy focus 19
We should accept that there are pros, cons and unwanted by-products associated with all forms of energy
IMAGES: SHUTTERSTOCK / ISTOCK
James Phipps, Managing Director, Cokebusters
Country ProjectProject typeAnnual capacity (Bcm) Albania Port of Vlorë FSRU 4.8 England Isle of Grain LNG Plant Expansion 2.2 Estonia Paldiski LNG Terminal 2.5 France Le Havre LNG Terminal 5 Germany Wilhelmshaven LNG Import Terminal 10 Germany Hamburg LNG Terminal 8 Germany Lubmin LNG Terminal 4.5 Germany Stade LNG Terminal 12 Germany Burghaun BioLNG Plant 0.9 Greece Argo FSRU 4.6 Greece Dioriga Gas FSRU Project 2.6 Italy Tyrrhenian/Adriatic Sea FSRU 10 Italy Porto Empedocle (Sicily) LNG Terminal 18 Latvia Skulte LNG Terminal 4 Netherlands Eemshaven LNG Terminal 8 Spain El Musel LNG Terminal 7 Source: EICDataStream FSRU LNG Terminal Bio LNG Terminal Key
Newfound sense of pragmatism oilreshapes and gas decarbonisation
The oil and gas decarbonisation debate has shifted in a more pragmatic direction during the past 12 months, largely in reaction to geopolitics and increasing anxiety over security of supplies.
Projects that were previously on hold, or that had limited late-life options, are back in play thanks to the improved economics of higher prices and the urgent need for alternative producers of energy –particularly gas.
There is also increased acceptance in society that gas is an essential transition fuel, displacing coal and oil as part of the
net-zero journey and underpinning industry eﬀorts to make signiﬁcant carbon emission cuts in the near to medium term.
Technology, innovation and expertise are enabling the changes required – from sequestration to subsea infrastructure, hydrogen production, electriﬁcation and ﬂare management, among other solutions.
Reducing emissions for existing projects, and safeguarding or even extending operational lifetimes, are the immediate challenges for the oil and gas sector – made more acute by ageing infrastructure in areas such as the North Sea.
Electriﬁcation is seen as the solution for many, whether in the shape of power from shore or co-located renewables such as ﬂoating wind. Clustered ﬁelds and other ‘crown jewel’ assets are likely to be the main beneﬁciaries, given the level of investment necessary.
Subsea technology companies will enable the development of oﬀshore grids, connecting renewable oﬀshore power, onshore supply and existing generating assets to decarbonise the power requirements of oﬀshore infrastructure, including processing, dynamic cabling, pipelines and umbilicals, remote power infrastructure and electric components, among others.
Hydrogen could also play a role. Using non-hydrocarbon fuels in the gas turbines
Energy Transition Decarbonising oil and gas 20 energy focus | www.the-eic.com
Security of supply and cost of energy join emissions reduction as key drivers in the journey to net zero, says James Richardson, commercial director for UK industrial decarbonisation at Baker Hughes
often used to power oil and gas infrastructure will be particularly important in regions where vulnerable or high-carbon onshore grids rule out clean, reliable electriﬁcation.
Flaring and methane emissions from existing assets are another area of focus, with industry committed to reduction towards zero in both areas.
More eﬀective measurement, management of ﬂares – think optimal destruction eﬃciency – and leak detection will play their part. Baker Hughes believes technologies such as ﬂare. IQ and Lumen are part of the solution.
There are many hard-to-abate sectors across our economies. Among them are some oil and gas operations, in particular ageing infrastructure or nearer production cessation dates that have limited options for electriﬁcation investment. Negative emissions technologies will also be crucial. Carbon scrubbers, including direct air capture, could be central to addressing these types of emissions.
Carbon capture, utilisation and storage (CCUS) is essential. Collection, transport and storage – as well as installation – each pose their own challenges, but the component technologies are largely in place and proven. CCUS can, importantly, transform Scope 3 emission proﬁles for operators both at the point of production and consumption.
Newbuild gas projects, meanwhile, have the relative luxury of embedding marketchanging emission reduction technologies from day one. These will often rely on advances proven in the subsea sector and, increasingly, ﬂoating installations.
Dynamic cabling, complex subsea power infrastructure, pipelines, oﬀshore grids –all will combine to lower the carbon footprint of projects during fabrication and construction, and keep it optimised during operational lifetimes.
Gas will, of course, dovetail with, and contribute to, parallel developments in adjacent sectors: production of hydrogen
and ammonia fuels, global transport infrastructure, expansion of deep-water and marine renewables, integration with CCUS, energy storage.
Removing carbon across multiple sectors demands a multi-pronged approach. To this end, Baker Hughes has acquired Mosaic Materials to further develop and scale its direct air capture technology, and invested in Ekona for turquoise hydrogen through pyrolysis, in NetPower with its Allam-cycle combined-cycle gas turbine technology, and the synthetic natural gas production developed by Electrochaea.
The carbon-emissions associated with future production will, as a result, be lower than those associated with current production; both the construction and operational emissions (Scope 1 especially) as well as the Scope 3 emissions associated with society’s consumption of the energy.
Recipe for success
The energy landscape is shifting as supply and cost concerns drive increased public acceptance that the low-carbon transition is a journey rather than an on/oﬀ switch. That does not, however, reduce the size of the hurdles ahead. If anything, it multiplies what will be necessary to meet the tripleheaded challenge of carbon reductions, energy security and rising costs.
The technologies necessary to achieve the energy transition exist, but we need to deploy those advances in the right way, at
Towards net-zero operations
Oil and gas: there is no single pathway to achieve a lower carbon future
Mitigation of flaring and venting
Mitigation of methane leaks
Subsea production systems
Invest in renewables
Switch to gas
the right time, to make the most immediate impact – across existing and future assets, and accepting the key role gas will play.
Success will come. It is a matter of understanding the size of the challenges ahead, taking the pragmatic steps that will be necessary to reach our goals, and having the will to achieve change at an acceptable price and without disrupting energy access. And the experience and expertise of industry will make all the diﬀerence.
By James Richardson, Commercial Director for UK Industrial Decarbonisation, Baker Hughes
IMAGE: GETTY Decarbonising oil and gas: Energy Transition
www.the-eic.com | energy focus 21
The technologies necessary to achieve the energy transition exist, but we need to deploy those advances in the right way, at the right time, to make the most immediate impact – across existing and future assets
What is needed to scale up hydrogen?
Thorsten Harder, Product Manager at Burckhardt Compression, oﬀers his thoughts on what is required to scale up hydrogen so that it may
greater role in decarbonising key industrial processes
energy density in liquid or gaseous form and produces zero emissions at the point of use.
support the integration of renewables into the energy system.
“There is no chicken and egg problem with hydrogen for decarbonising heavy industry,” Harder continues. “When it comes to hydrogen as fuel for heavy vehicles, it is much more challenging. But for industry we have demand, we have a way of producing hydrogen to guarantee supply... we just need to change the way of producing hydrogen to reduce the greenhouse gases that are produced or released. That’s the easiest way to decarbonise quickly.”
A strong energy mix is critical to ensuring the world can meet both energy security and sustainability demands simultaneously.
Technology advances in solar and wind and enhanced eﬃciencies in more traditional forms of energy generation are contributing to these goals, yet all component parts must continue to evolve if we are to be successful. That, undoubtedly, includes the successful harnessing of new energy sources such as hydrogen.
“Hydrogen today is already used in diﬀerent industries,” explains Thorsten Harder, Product Manager at Burckhardt Compression – the worldwide market leader for reciprocating compressor systems. “This includes reﬁneries and the chemical industry, gas production for semiconductor manufacturing and, of course, fertiliser production.”
At present, natural gas, coal and oil provide the majority of energy for many such industrial processes that, combined, are responsible for approximately 20% of global emissions.
If used optimally, hydrogen has incredible potential to decarbonise these industries and the transportation sector. Indeed, it is a versatile and clear fuel that can be stored and transported at high
However, the challenge today is that the majority of hydrogen is grey, meaning it has been created from carbon-abated fossil fuels.
According to the European Commission, 96% of hydrogen production is powered by natural gas. Furthermore, the International Energy Agency (IEA) reports that hydrogen production is currently responsible for 830m tonnes of CO2 emissions per year – the equivalent of the annual carbon emissions of the UK and Indonesia combined.
Moving from grey to green
Clearly, at present, hydrogen is not as clean as it can be. So, how can we improve its viability as a sustainable fuel moving forward?
“The easiest way to decarbonise these industries is with greener production processes,” Harder explains. “This is commonly achieved in two ways. One, you use electrolyser-produced green hydrogen, or two, you can try to capture the CO2 coming from the steam methane reformers and store it permanently deep underground (blue hydrogen).”
Indeed, these methods are beginning to gather momentum. The IEA further reveals that in the past two decades, more than 200 projects have started operation to either convert electricity and water into hydrogen to reduce emissions, or
Green hydrogen is key to making hydrogen a more viable energy transition fuel long term, although journeying down this route poses a diﬀerent challenge.
“Accessing green hydrogen is highly dependent on location and infrastructure,” Harder explains. “If you’re close to the product site, you may only need a small pipeline. However, for distances of a few hundred kilometres or more, it’s more economical to transport compressed gaseous hydrogen by road using trucks and pressurised tube trailers.
“Equally, if you have high-quality hydrogen and the right infrastructure for fuelling, you may want to have liqueﬁed hydrogen, but that requires the availability of liqueﬁed hydrogen and the right fuelling station technology next to it.”
Harder then turns his attention from access to production, outlining similar challenges. “You can produce ‘green’ hydrogen from electrolysers, of course. But it’s diﬃcult when you have limited renewable resources close to the site where you need it. In Switzerland, for example, we don’t have a lot of solar and wind. We may have hydropower, but if you want to extend the capacity on green hydrogen in Switzerland, it’s not so easy.”
There are work arounds available. Pyrolysis technology can be used to convert natural gas into ‘turquoise’ hydrogen without emitting CO2 – yet this is a technology that remains in its infancy.
Of course, these developments are promising, highlighting the increasing
22 energy focus | www.the-eic.com
support of the hydrogen economy in making hydrogen a viable fuel source. However, for Harder, the priority needs to be focused on establishing key production centres that the entire sector can then begin to scale from.
“We’re already using huge amounts of hydrogen at reﬁneries, in ammonia plants, and other industrial applications,” he explains. “Here, you have a constant demand for hydrogen. If you can make that hydrogen green, then you can begin to create desirable hydrogen epicentres in clusters from which the rest of the hydrogen economy may develop.”
Opportunities, barriers and the importance of compression technologies
Several studies are being explored that could see hydrogen clusters become established.
Harder points to promising investigations into producing hydrogen at oﬀshore wind parks with dedicated oﬀshore platforms that are built to accommodate electrolysers and feed into storages. In the Netherlands, for example, Vattenfall has proposed to build the world’s ﬁrst oﬀshore green hydrogen cluster that would see the integration a 45 MW hydrogen cluster into an oﬀshore wind farm, with three turbines equipped with electrolysers.
“Producing electricity oﬀshore, bringing it onshore and transferring it through high voltage power lines is more costly and less eﬃcient than feeding hydrogen into a pipeline and then using repurposed natural gas pipes,” Harder aﬃrms.
“It’s something I see oﬀshore a lot. Big utility companies, instead of feeding electricity into the grid, they plan big electrolyser stations oﬀshore, pipeline feeds, compressors and then a pipeline to the shore to feed into the natural gas or dedicated hydrogen pipeline grid of Europe.”
Functioning cross-border energy infrastructure such as this will be critical. According to the Hydrogen
Council, approximately 30% of global primary energy supply is currently traded internationally – a need that will persist with the capacity of renewable energy production varying wildly between countries.
Indeed, some countries like the UK are planning to develop a ‘hydrogen backbone’ that would see gas transmission pipelines repurposed to link industrial clusters domestically. However, if an international trade network is to become consolidated, the lack of liquidity in the hydrogen market must be addressed.
“Right now, we only have point-to-point trading between molecule producers and customers,” Harder explains. “There isn’t really a hydrogen market that has been established yet. But for hydrogen to work, we would need to have some sort of free trade and transportation policies of the molecules within key regions. Not only that, but we also need aligned emission regulations and aligned CO2 costs.”
Technologies also need to continue to evolve to make hydrogen more of a commercially viable reality for many – an area where several promising developments are being pursued.
The ongoing improvement of compression technologies stands as a prime example, as Harder explains: “Compression solutions play a very important role. It doesn’t matter which format you want to use hydrogen – from liqueﬁed hydrogen to gaseous hydrogen, you need compressors.
“A major question facing the hydrogen sector currently is surrounding how to scale critical infrastructure, and that debate revolves around deciding which technology ﬁts best for various ﬂows.
Technology choice is critically important, and compressors provide us with that ability to choose.”
A European outlook
Indeed, it is safe to say there are plenty of challenges and opportunities ahead – particularly when looking at the European market.
Owing to areas of dense populations, the expansion of renewable energies into these places is a major social challenge on the continent. For this reason, the World Economic Forum outlines that the region will remain an energy importer, focused on building a strong and interconnected grid infrastructure while also improving its powerful technology position.
Recent moves from Germany show some logic here. Indeed, the country has signed several global agreements as it moves aggressively towards importing hydrogen products, technologies and capabilities from global players including the UAE, India, Japan and Scotland.
Generally speaking, however, there is still a long road ahead in establishing a more eﬀective and expansive hydrogen economy on the continent.
“I think we are at the very beginning,” Harder muses, concluding with his forecasts for the future. “However, we have major subsidies and proven feasibility studies on our side now, and I think we’re poised for lift oﬀ – a lot of things are now conceptually worked out.
“If I had to say one thing was key moving forward, it would be improving access to green hydrogen, not only domestically, but equally via a global infrastructure network facilitating crossborder trade. If Europe is to successfully establish a thriving hydrogen economy, this is vital.”
For more information, contact:
www.the-eic.com | energy focus 23
Green hydrogen is key to making hydrogen a more viable energy transition fuel
Since the 1970s, Norway has exploited the abundant oil and gas on its continental shelf, contributing to budget surpluses and the development of its sovereign wealth fund. It is the world’s fourth largest gas exporter and 11th largest oil exporter. However, fossil fuels are losing their dominance, and by mid-century half of energy demand will be met by non-fossil fuels, impacting the country’s balance sheet. Norway’s oil and gas revenues were US$34bn in 2020, but, given equal prices, this will fall by 63% by 2050.
Well positioned for green shift
Half a century of oﬀshore experience and a strong ﬁscal position means Norway can successfully adapt to the energy transition. It is especially well positioned in ﬂoating oﬀshore wind (FOW) power production, and Hywind Tampen in the North Sea will be the world’s largest FOW development when it is commissioned later this year. DNV forecasts that, by 2050, the world will have installed just over 260GW of FOW – corresponding to 3,000 Hywind Tampen ﬁelds – of which almost 7GW will likely be in Norwegian waters and 40GW in the rest of Europe. With its oﬀshore gas and oil experience, Norway has competence in subsea, anchoring, ﬂoaters and much of what is needed to develop and scale FOW.
Carbon capture and storage (CCS) will play a major role in decarbonising the global power system and heavy industry. In our Energy Transition Outlook 2021, we forecasted that 26% of natural gas in Europe will be decarbonised by 2050, either as hydrogen or via post-combustion CCS in power and industrial plants. More than 90% of Norway’s gas is exported to Europe. It can either be decarbonised at point of use, or on the Norwegian Continental Shelf for subsequent export in a decarbonised form, such as hydrogen. Norway is also well positioned to receive CO2 captured by European industry or power plants and store it in reservoirs under the seabed.
Norway plays an important global role in maritime transport and
innovation. Shipping is a hard-to-abate sector, with direct electriﬁcation expected to play only a minor role beyond the short-sea segment. The International Maritime Organization and the shipping industry are initiating a massive R&D eﬀort to decarbonise maritime fuels. Norway has extensive experience and a lead in liqueﬁed natural gas, batteries and hydrogen, including hydrogen fuel cells, for domestic short-sea shipping. Extending this leadership into research, piloting and development of low and zerocarbon fuels, batteries and related infrastructures for deep-sea shipping is a promising opportunity.
More needs to be done
While Norway is well-positioned for the transition, that does not mean it is leading it. The country has ambitious climate targets that involve reducing emissions by 55% compared with 1990 levels by 2030, with a further reduction to net zero by 2050. DNV, however, ﬁnds that Norway will likely achieve a 24% reduction by 2030 and a 79% reduction by 2050. We also argue in our Pathway to Net Zero report, which lays out what we believe to be the most likely scenario for the world in terms
of reaching Paris Agreement goals, that richer regions such as Europe (including Norway and the UK) will need to hit net zero before 2050. Norway is thus likely failing on its goals and falling short of what is required.
Political decisiveness is crucial
Norway’s motivation to hasten its transition is not just climate sensitive, but also economically imperative. Its domestic supply is dominated by hydropower, which produces a surplus that can then be sold to other countries. However, to supply the Norwegian Continental Shelf with electricity while also supporting green industrial growth, Norway will likely have to import electricity between 2025 and 2035. Even with the assumed buildout of oﬀshore wind for energy export, the modelled 11 TWh/year in net electricity exports by 2050 will only translate to an additional income of US$614–717bn per year. In simpler terms, Norway needs to put in place the policy framework to rapidly increase the buildout of oﬀshore wind.
Speeding up the transition
While Norway has the potential to transition faster, Denmark is putting its decarbonisation pledges into action. Its energy islands show the scale of ambition required to meet the Paris targets and, so far, are a successful demonstration of how public opinion, policy and technology can be galvanised to transition more quickly.
By Sverre Alvik, Programme Director Energy Transition, DNV
Energy Transition Norway
www.the-eic.com | energy focus 25
Norway has ambitious emission reduction targets but is not on track to meet them, says DNV’s Programme Director of Energy Transition, Sverre Alvik
Can Norway call itself a leader of the energy transition?
The next big thing in clean energy?
FIVE COUNTRIES TO WATCH
EIC Research Analyst Nabil Ahmed
The global market for ﬂoating solar photovoltaic (FPV) has grown in recent years, fuelled by falling prices, decarbonisation targets and the need to conserve land and water. The outlook is positive, with signiﬁcant growth projected in the short-to-long term. Some expect it to become a ‘third pillar’ of solar power, after rooftop and ground deployment.
The market, estimated at 1.6GW in 2021, is expected to reach 4.8 GW by 2026, led by Asia Paciﬁc, which is forecasted to account for 2.7GW of this. While Japan pioneered the idea at research scale over 10 years ago and has the most projects in operation, China leads the way in installations, with India and South Korea close behind.
Oﬀering ﬁnancial and technology support, the Asian Development Bank is instrumental in expanding FPV in the region.
EICDataStream is tracking 58 active ﬂoating solar projects, totalling 19GW of capacity.
By Nabil Ahmed, Research Analyst, EIC
3 FPV projects under development +815MW
Three FPV projects are being tracked on EICDataStream, with total capacity of 815MW and a total value of US$747m.
Greek renewables company Terna Energy is realising the country’s ﬁrst FPV plant – a 103 MW project on Lake Pournariou in the Arta region. It also has plans for FPV plants on Lake Kastrakiou (120MW) and Lake Stratou (42MW). The three projects have a combined value of US$207m.
14 FPV projects under development +4.2GW capacity
India’s FPV journey began in 2014. Although high costs and design challenges have held back the deployment of the new technology, interest is now growing, evidenced by the recent ﬂurry of FPV activity in the country. EICDataStream is currently tracking 14 under development ﬂoating solar projects; if all constructed, this could see a combined capacity of 4.2GW added to the grid.
Projects to note since August 2021 include three projects for the state-run National Thermal Power Corporation – a 25MW FPV plant at Simhadri in Andhra Pradesh, a 92MW FPV plant Kayamkulam in Kerala and a 100MW FPV project at Ramagundam. Tata Power Solar Systems commissioned India’s largest ﬂoating solar project, at 101.6MW, during 2022, and India’s state-owned National Hydroelectric Power
Corporation formed a joint venture with the Green Energy Development Corporation of Odisha for the development of 500MW of ﬂoating solar projects in the state of Odisha.
India could potentially build 280GW of FPV capacity by utilising around 30% (nearly 1,800 km2) of its medium and large water reservoirs.
To attract more players and boost the subsector, the industry has called for more government support in the form of funding and opportunities to work with technology and science institutions, as well as asking the government to bring ﬂoating structure manufacture under the production-linked incentive programme
PPC Renewables is another Greek player interested in FPV. It has received permits for 1.9GW, of which 50MW are ﬂoating projects; the ﬁrst is to be built on Lake Polyfytos on the Haliacmon river.
German SINN Power plans to showcase the prototype of an FPV plant and a hybrid system using wind and wave energy in Crete, while another German company, BayWa, is looking at projects for the technology in Greece.
Greece aims to install 5GW of solar by 2030, so more policies and subsidies are needed for it to have an impact. The Greek parliament recently approved a new law that reduces the average time needed to license large-scale renewable energy projects from ﬁve years to 14 months. It also makes special provision allowing development of 10 FPV pilots (capacity 0.5-1MW) under a fast-track licensing process that excludes ﬂoating projects from participating in competitive tenders.
Projects to watch
• 265MW FPV Artiﬁ cial Reservoirs Complex (Kastraki Dam, Pournari Dam, Army Reservoir)
• 500MW FPV Complex Polyfytos Artiﬁ cial Reservoir
• 50MW FPV Greece Complex
Renewables Floating solar
Floating solar is a relatively new concept that is catching on fast in some regions, says
to watch • 1,726 MW Maithon, Tilaya, Konar Dams FPV Farms • 600MW Omkareshwar Dam FPV Farm • 500MW Odisha FPV Farm
26 energy focus | www.the-eic.com
14 FPV projects under development +7.5GW
With land scarce on the archipelago, it comes as no surprise that Indonesia is a signiﬁcant emerging market for FPV. It is set to form a large part of the country’s wider, technology-agnostic push into renewables, as the world’s largest coal exporter seeks to expand its generation ﬂeet to meet the growing electricity needs for its large population.
Currently EICDataStream is tracking 14 ﬂoating solar projects across Indonesia, with a total capacity of 7.5GW. State-owned utility company Perusahaan Listrik Negara began construction on a 145
4 FPV projects under development +183MW
MW ﬂoating solar facility in August 2021, which is set to be the one of the largest ﬂoating solar farms in the world when it commences operation in Q4 of 2022. Its innovative design will provide power in association with an existing hydropower facility in West Java.
Indonesia plans to develop a further 60 FPV installations to contribute to its target of 23% of power generation from renewables by 2025.
Projects to watch
• 145MW Cirata Reservoir FPV Plant
• 2.2GW Batam FPV Project
• 3.5GW Riau FPV Project
1 FPV project under development +500MW
As Vietnam looks to diversify its energy mix and increase its volume of non-hydro renewable energy projects, the potential for FPV in Vietnam is quite promising, and the market is expected to grow rapidly within the next decade.
EICDataStream is tracking the development of a 500MW ﬂoating solar project in Dong Hai Province, which will be operated by Blueleaf Energy. Many more projects are expected as ADB’s ‘quick look’ satellite imagery surveys of Vietnam’s hydropower reservoirs have found that they
Portugal is pushing FPV to advance the energy transition. Its ﬁrst FPV auction, in April 2022, proved to be a success, with Portugal breaking a new record by setting the lowest energy price in the world for the technology (US$4.4/MWh).
The government awarded the rights to develop 183MW, of which around 103MW is backed by Contracts for Diﬀerence. EDP Renováveis (EDPR), a subsidiary of Portugal’s main utility EDP, secured lots for a combined 70MW at the southern Alqueva dam, while the country’s second-largest renewable energy producer,
could easily support several gigawatts of ﬂoating solar.
The country is well placed for growth due to its local supply chain. The latest draft version of its eighth power development plan, drawn up in March 2021, contains a target for 8.7GW of new solar additions, including FPV, between 2021 and 2030.
Projects to watch
• 500MW Dong Nai FPV Project
Finerge, won three lots with a combined 38MW of capacity. French renewable developer Voltalia won 33MW of capacity development rights and Spanish utility Endesa won the right to develop 42MW of FPV capacity on the Alto do Rabagão reservoir by 2026, where it plans to invest US$117m. EDPR also won an additional 14MW of solar over-capacity and 70MW of hybrid wind capacity.
Following the auction, EDP’s 5MW FPV plant in Alqueva was inaugurated in July 2022.
Projects to watch
• 33MW Cabril FPV Plant
• 100MW Alqueva Dam FPV Plant
The way forward
One of the challenges faced by the global ﬂoating solar sector is lack of technical knowledge: there are only a handful of developers in ﬂoating solar. The higher project cost is another challenge; as with any new technology, it will take time for it to become as economical as ground solar. Given this, ﬁnancial incentives and government support are still crucial in most markets.
The supply chain needs to be extended to account for the new designs and technologies needed. For UK companies with expertise and a comprehensive understanding of the oﬀshore renewables industry, the market oﬀers signiﬁcant opportunities.
www.the-eic.com | energy focus 27
(Below) Aerial view of ﬂoating solar farm in the dam in Ubon Ratchathani, Thailand
Floating solar: Renewables
Thinking of Middle East? exporting to the
Khor Mor Field Expansion Project Oﬀ shore Kurdistan, Iraq
This project seeks to expand production from Khor Mor field, responsible for meeting 75% of the Kurdistan regional government’s supply demand for power generation. After the construction of the first gas train is completed in April 2023, following a CAPEX of US$600m, it will have increased Khor Mor’s gas output from 450m cubic feet per day (MMcfd) to 700MMcfd. The second phase, which envisages the construction of a second 250MMcfd gas train, will then expand production immediately after the first.
Europe has been home to a well-established oil and gas industry for decades. However, today, less than a third (26.6%) of the current hydrocarbon projects being tracked by EICDataStream are in the region. The UK’s efforts to end support for fossil-fuel projects reflect policy shifts by European governments – something that has also been explored in Survive & Thrive VI, the EIC’s latest Insight Report (see page 11 for more details).
For companies wondering where to go next, the Middle East is a promising export destination – EICDataStream shows that 12.4% of all oil and gas projects listed are located in the region. It has long been a key market for the supply chain and continues to provide
capital-intensive opportunities across the up, mid and downstream segments. Estimated reserves for countries in the Middle East are huge. For example, Iraq has nine super giant fields holding more than 5bn barrels (Bbbl) of oil, and 22 giant fields, each with over 1Bbbl. In Iran, meanwhile, latest assessments put the country’s estimated proved natural gas reserves at 1,200tn cubic feet.
Along with ambitious plans for carbon neutrality and sustainable development – Saudi Arabia intends to become carbon neutral by 2060, while the UAE looks to capture 5m tonnes per year of carbon dioxide by 2030 – more than US$900bn is being invested throughout the Middle East to dive into these prospects, bringing new facilities to life and increasing production.
Looking to expand into the Middle East? The EIC can help
If you are thinking about doing business in the Middle East, our team in Dubai are on hand to help. For services including market intelligence, project data, industry connections and export assistance, email firstname.lastname@example.org
Long Term Agreement (LTA) Programme Oﬀ shore Eastern Province, Saudi Arabia
With total investment reaching US$9bn for the 2019–23 period, Saudi Aramco’s LTA Programme involves brownfield development projects for eight of the operator’s offshore fields in the Eastern Province of Saudi Arabia. These are the Safaniya, Zuluf, Berri, Marjan, Hasbah, Ribyan, Qatif and Abu Safah fields, all with contracts awarded to different companies or the tender process still ongoing.
Saud i A rabi a
Given the region’s substantial
and the fact that plenty of investment is taking place, it is no surprise that the Middle East is an attractive export destination. With support for fossil fuel projects ending in Europe, now is the time to look further aﬁeld for oil and gas opportunities
28 energy focus | www.the-eic.com Oil and Gas Middle East
Sitra Reﬁnery Update Project Sitra, Iraq
Bahrain Petroleum Company’s refinery in Sitra has an ongoing update project with start-up marked for 2023. The only refinery in Bahrain since its construction in 1936, its capacity is being expanded from 267,000 to 380,000 barrels per day (bbl/d). Activities planned include the construction of a resid hydrocracking unit, expansion of the existing mild hydrocracking unit’s capacity, and replacement of the current fluid catalytic cracker with a new one. The Sitra complex will also produce petrochemicals, most likely olefins.
Jafurah Gas Terminal Jafurah, Saudi Arabia
The Jafurah Gas Terminal is being built as a key development of the second phase of Saudi Aramco’s unconventional resources programme, part of the company’s long-term strategy to boost its unconventional gas production to 3bn cubic feet per day (Bcfd) by 2030. Jafurah will process up to 1.1Bcfd of unconventional (shale) raw gas from nearby areas, producing sales gas, ethane and natural gas liquids plus condensate. The project, which is composed of ﬁve diﬀerent contracting packages, has its value estimated at US$3.6bn, with start-up set for 2024.
North Field Expansion Project Ras Laﬀ an, Qatar
Following Qatar’s decision to expand production at the North Field – the largest gas field in the world, accounting for 14.2% of global reserves – QatarEnergy will also expand the liquefied natural gas (LNG) capacity of its facilities in Ras Laffan, Al Khawr. Requiring US$18bn, four new LNG trains will be installed, raising the country’s production capacity from 77m tonnes per annum (Mtpa) to 110Mtpa by 2025. ConocoPhillips, Eni, ExxonMobil, TotalEnergies and Shell are international partners for the project.
PROJECTS TO WATCH ACROSS THE MIDDLE EAST
Ruwais Derivatives Park Ruwais, UAE
TA’ZIZ, a consortium between Abu Dhabi National Oil Company (with a 60% share) and Abu Dhabi Developmental Holding Company (with 40%), plans to build seven chemical production facilities at its Industrial Chemicals Zone in Ruwais, Abu Dhabi. Production is set for 2025. Final investment decision for the project is expected later this year and is subject to relevant regulatory approvals.
Al-Zour Reﬁnery Al-Zour, Kuwait
Construction is currently ongoing for Al-Zour, which will be one of the world’s largest grassroots reﬁneries. Located 90km south of Kuwait City, its reﬁning capacity is estimated to reach 615,000 bbl/d. It will replace the ageing 20,000 bbl/d Shuaiba Reﬁnery, which began production in 1968. Commissioning works on Al-Zour started in late 2021, and operations will commence throughout the second half of 2022.
Sur Reﬁnery and Petrochemicals Complex Sur Industrial City, Oman
Shumook Investment and Services
SAOC, the investment arm of the wholly Omani government-owned Public Establishment for Industrial Estates (Madayn), is exploring plans to establish a world-scale reﬁnery and petrochemicals complex in Sur Industrial City. The proposed complex, which will be established on a build-ownoperate basis, is expected to have a processing capacity of 300,000 bbl/d. The plant is currently under a pre-FEED stage and should be concluded by 2029.
Iraq UAE O
ata r Q waitKu IMAGES: SHUTTERSTOCK / ALAMY / GETTY
m a n
Middle East : Oil and Gas www.the-eic.com | energy focus 29
Amid an unprecedented energy crisis, gas technologies can play a critical role in the UK’s power mix: not only as a reliable transition technology that helps ensure grid stability by countering the variability of renewables, but also as a sustainable destination technology. The UK has recognised that its plan for a decarbonised future relies not on a single technology but on a broad and integrated spectrum of multiple lower-carbon-emitting technologies enabled through parallel grid modernisation and investment. However, deployed technologies must be compatible with long-term climate objectives. With the right investments in low-carbon gases such as hydrogen, and carbon capture, utilisation and storage (CCUS) technologies, gas power generation can progressively decarbonise and support sector electriﬁcation, paving a path to 2050.
Strengthening the grid
The UK’s energy grid must prepare for the changes ahead by accelerating physical and digital upgrades to better manage the increase in decentralised renewables. For variable renewables to be truly integrated into power systems, the UK needs to invest in grid
Decarbonisation: a holistic approach to the UK’s energy system
Power The future of gas 30 energy focus | www.the-eic.com
With UK energy prices at an all-time high and a surge in inﬂation, access to aﬀordable energy and the wider green transition are both under threat. Our short-term energy security measures must therefore complement our ultimate climate action, says GE Gas Power’s Head of Strategy, Martin O’Neill
improvements. There is a clear need for better eﬃciency, improved stability and greater interconnectivity of electricity grids.
Market stimulus for future grids and the dispatch of decarbonised assets are imperative to enable the energy transition. With a strong grid backbone, more renewables can be added more quickly. This holistic approach would ensure that synchronous rotating assets strengthen grids in the near term, and that lower carbon-intensity assets are dispatched ahead of higher carbon-intensity peers.
Getting the regulation right and strengthening energy grids is key. We are all currently grappling with new market dynamics generated by geopolitics. The challenge for industry and electricity generation is to adjust the market design to ensure energy security, aﬀordability and decarbonisation. Accomplishing this simultaneously is no easy objective. To get there, the correct incentives are required to attract investment in the right type of capacity. We need coordinated European regulation and incentive mechanisms to roll out the necessary energy infrastructure quickly and eﬃciently.
Breakthrough decarbonisation technologies such as CCUS and hydrogen will be pivotal in unlocking a carbon-neutral future. Against a backdrop of nuclear revival and coal phase-out in the UK and other European countries, massive investments are needed to future-proof the UK’s energy supply.
General Electric (GE) is making progress towards this future-proof approach. Recently, a coal-ﬁred unit project with ORLEN Group in Poland was transformed into a new agreement for the construction
of a 745 MW gas-ﬁred power plant, delivering low-carbon power. More than 100 of GE’s gas turbines currently use hydrogen or similar alternative fuels and are able to co-ﬁre natural gas with cleaner fuels, such as hydrogen and biomethane. Sector coupling is another crucial component of the UK’s net-zero vision and the build-out of regional decarbonisation blueprints. The East Coast Cluster in the
north-east of England is a bold and compelling move. Net Zero Teesside Power – a project sponsored by bp – will help to deliver a ‘just transition’, driving social and economic opportunities in a region that has a proud manufacturing heritage. At the centre of clusters such as Teesside will be access to aﬀordable low-carbon baseload dispatchable electricity generated via a natural gas combined-cycle plant with carbon capture.
Using that power generation plant as the ‘heart’ of the hub, economies of scale will be generated by sharing carbon removal infrastructure so that the lowest-cost transportation and sequestration of captured carbon dioxide back to depleted North Sea wells can be achieved. Imagine –in this decade – the UK could export ‘green’ cement, steel and fertilisers from Teesside. This could drive meaningful growth and employment for industry, the local economy, the region and the UK’s GDP.
Leading the energy transition
GE is uniquely positioned to play a collaborative role in the energy transition, with years of expertise in the industry and complementary technologies, including renewables, gas, nuclear, grid and digital, and a large spectrum of power generation and distribution. When thinking about the future of UK energy, and global energy security, it is important to look at gas turbine technologies not just as a transition technology, but as a sustainable destination technology. While today’s energy security is exacerbated by energy supply disruptions, the UK must act as a leader and catalyst for the global energy transition.
By Martin O’Neill, Head of Strategy, GE Gas Power
The future of gas: Power
www.the-eic.com | energy focus 31
We need coordinated European regulation and incentive mechanisms to roll out the necessary energy infrastructure quickly and eﬃciently
(Right) CCUS and hydrogen will be pivotal in decarbonising gas turbines
SUPPORTING THE ENERGY SECTORS INTO CLEANER ENERGY
CARBON CAPTURE, UTILISATION & STORAGE
OFFSHORE FLOATING WIND
SURFACE & SUBSEA ELECTRIFICATION
As a UK based manufacturer with over 50 years of experience in supplying Control and Choke valve products to the world’s energy markets, KOSO Kent Introl is ideally positioned to support the energy sectors on their journey into cleaner energy be it land, sea or below.
Making power grids fit for the transitionenergy
According to the US Energy Information Administration, world energy demand will increase by 50% by 2050. At the same time, the UN and most of its members have committed to achieving carbon neutrality by the same year. These factors, together with a growing awareness that climate change is having a major impact on the planet and our lives, mean that electricity production from renewable sources will have to increase. This will require an integrated strategy to modernise energy systems, starting with more ﬂexible, reliable and resilient grids.
Time to overhaul the system
Our grids, most of which were designed more than 100 years
ago, are not fully equipped to deal with the challenges that we are facing today. There are two possible solutions to take on these challenges: the ﬁrst is to give the grids a physical overhaul, which is necessary but requires substantial ﬁnancial investment and an even greater amount of time. The second solution, which is where our expertise comes in, involves transforming existing infrastructure by ‘adding intelligence’. In other words, through digitalisation and the use of smart meters, more information can be provided to consumers and, by the same token, to power grids operators (PGOs).
Grid modernisation as a global priority
Governments and organisations worldwide are already working on these solutions. In the case of the EU, a joint report by Eurelectric, Monitor Deloitte and E.DSO, based on data from 10 European countries, argues that European distribution grids will need investments of €375–425bn by the end of the decade.
European distribution grids will need investments of €375-425bn by 2030
Under the Obama administration, the US Department of Energy set up the Grid Modernization Initiative, and this year’s launch of the Building a Better Grid Initiative aims to catalyse the nationwide development of new and upgraded high-capacity electric transmission lines. These are essential to reaching US President Joe Biden’s goal of 100% clean electricity by 2035 and a zero-emissions economy by 2050.
www.the-eic.com | energy focus 33
Power The future grid
As the world prepares its grids for the green electricity revolution, stakeholder and end user collaboration will be key, says Robert Denda , CEO of Enelowned company Gridspertise
Countries in South America, led by Brazil, Colombia and Chile, are expected to invest US$18.1bn in smart grid infrastructure over the next decade. Likewise, South Africa’s Smart Grid 2030 Vision was developed by the South African Smart Grid Initiative under the guidance of the Department of Energy and the South African National Energy Development Institute.
Major challenges for future grids
Future power grids and the utilities managing them will have to face and overcome key challenges related to electriﬁcation, integration and prosumerism, as well as digital automation.
Integration and prosumerism for sustainable electriﬁcation
The growth of electricity demand, intermittent renewable energy ﬂows and new energy players will increase the complexity of the energy system. Electric mobility will grow exponentially as both the EU and the US plan to end the sale of fossil-fuelpowered vehicles by 2035. There will also be a shift away from heating with fossil fuels to electric heat pumps.
At the same time, meeting the needs of aware, digital and active customers is becoming more challenging: ‘prosumers’ are emerging with rooftop solar installations, electric vehicles, and other distributed energy resources, such as home batteries.
Distribution grids are the networks that connect all the stakeholders of our electric future, and PGOs are required to expand smart grid investments to improve grid resilience and facilitate the dispatching of distributed generation and ﬂuctuating bidirectional ﬂows. At the same time, they should compress reaction times to support network reconﬁguration while improving overall operation and service performance for ﬁnal users.
Digital automation for reliable electricity network
Throughout the years, automation and remote control systems, smart meters, and sensors connected to advanced communications infrastructures have signiﬁcantly increased the eﬃciency and reliability of our electricity networks. Today, the increase in distributed generation requires PGOs to extend remote control and automation from medium-voltage to low-voltage grids and increase intelligence at the edge. This is why Gridspertise launched the QEd – Quantum Edge® device. Thanks to its decentralised computational capability and edge multi-purpose platform, this revolutionary all-in-one solution enables PGOs to run key grid functionalities directly on the edge and to virtualise key network automation functions through customisable applications.
A collaborative approach to unlock the electric future
To cope with the challenges of the energy transition and unlock the full potential of electric mobility and smart buildings, we need to move faster than ever before, and PGOs all over the world will have to transform power networks into smart grids. Companies such as Gridspertise can provide solutions for the technology component to help grid operators deal with the load growth, deploying investments in legacy infrastructure in a costeﬀective way and thereby keeping power delivery within quality and aﬀordability parameters.
Preparing power distribution grids for the challenges ahead will require coordinated action between tech companies, power grid operators, policymakers, regulators and many other stakeholders, including electricity end users. Only through active collaboration with grid customers can we truly accelerate our electric future.
By Robert Denda , CEO, Gridspertise
34 energy focus | www.the-eic.com Power: The future grid
Countries in South America, led by Brazil, Colombia and Chile, are expected to invest US$18.1bn in smart grid infrastructure by 2030
(Previous page) Low voltage edge processing for monitoring and controlling the low voltage grid
(Below) Grid automation management
Held in parallel with WindEnergy Hamburg Exploring new horizons: 27 30 September 2022 Be sure to take part in the world’s biggest and most important business platform for the onshore and offshore wind industry! Organised by:In co-operation with: European Partner:Partners: Global Partner: WE22 186x125mm SATZ Energy Focus indd 1 01 08 22 11:19
South Korea returns to nuclear power
In its second U-turn in less than a decade, South Korea’s new Energy Policy reverses phaseout plans and targets 30% nuclear share in 2030, says EIC Energy Analyst
As well as going all in on nuclear power, President Yoon hopes to reduce the country’s dependence on coal and natural gas for most of its electrical generation. The government has said that the new energy policy will reduce South Korea’s reliance on fossil fuel imports from 81.8% last year to 60% in 2030.
By cautiously cutting coal-ﬁred power generation, the policy will also help the country achieve the Nationally Determined Contribution goal, set by the previous administration, of reducing greenhouse gas emissions by 40% from 2018 levels by 2030.
South Korea’s nuclear sector is experiencing a surge of optimism as new president Yoon Suk-Yeol pledges to turn the country into a “nuclear reactor superpower”.
President Yoon, who took oﬃce in May, is bullish on using nuclear power as a clean energy solution to address the issues of energy security and climate change, and wants to see nuclear power generating more than 30% of the country’s energy by 2030, up from 27% in 2021.
Reversing former President Moon Jae-in’s phase-out policy, which was adopted in 2017, President Yoon plans to put nuclear power at the heart of the country’s energy strategy. In addition to resuming construction on two reactors, extending the life of those already in operation and building two new ones, President Yoon wants to see a renewed focus on exports of nuclear plants.
New support programme
The new government plans to place new orders of more than US$71.4m in nuclear projects this year, including the reconstruction of the Shin Hanul (Units 3 and 4). The goal is to inject more than US$767m in project orders by 2025 and accelerate the order process for the new Hanul units.
To enhance its nuclear power plant export capabilities, the Ministry of Trade, Industry and Energy is planning to deploy a Project for Building Nuclear Export Foundation, which includes funding nuclear energy conferences and exhibitions, and facilitating export processes.
40% reduction in greenhouse gas emissions by 2030
36 energy focus | www.the-eic.com Nuclear South Korea
South Korea’s plans to become a global nuclear powerhouse include:
US $71.4 m
New orders worth US$71.4m planned for 2022 including reconstruction of the Shin Hanul (Units 3 and 4)
US $767 m
Inject US$767m+ in project orders by 2025
30% Nuclear power to make up 30%+ of energy mix by 2030
US $292 m
US$292m of liquidity to be supplied to the market in 2022
Build 10 reactors abroad by 2030
US $307.9 m
by 2028 to develop and commercialise SMRs
US $561.8 m
Invest US$516.8m+ in 2022 for R&D and US$2.3bn+ from 2023 to 2025
South Korea also hopes to build 10 reactors abroad by 2030, and current work exporting nuclear technology to countries including Saudi Arabia and Poland is ongoing. Furthermore, the government is set to provide liquidity of US$292m this year in SME funding, technology guarantees and subcontractor loans.
At the same time, the nation will spend more than US$515m on research and development related to demand in overseas markets to domestically develop core parts and support exports of smaller contractors. South Korea’s energy ministry is scheduled to analyse the industry’s supply chain by the end of 2022 and will manage key product items to prevent disruptions in the nuclear fuel, raw materials and equipment while increasing investment in raw materials, components and facilities. To this end, President Yoon has enrolled in the US-led Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology program and the Indo-Paciﬁc Framework for Prosperity.
The government has also said it will inject a total of US$307.9m by 2028 for the development and commercialisation of homegrown small modular reactors (SMRs). The SMR will be designed to have power generation capacity of 300MW or less.
Waste management is key
There are some challenges that need to be addressed, particularly when it comes to the handling and disposal of spent fuel. Local nuclear plants currently store spent fuel in temporary on-site facilities due to repeated failure to ﬁnd suitable locations for disposal. South Korea’s one and only disposal site, near Gyeongju, took 19 years for the government to identify. The Ministry of Trade, Industry and Energy has estimated that the installation and initial operation of a permanent high-level waste complex could take up to 37 years.
Good to be back
However, South Korea has an extensive nuclear history, with years of R&D experience bolstering the region’s sector. Major South Korean companies such as KEPCO, Doosan Group and Samsung have a global presence, delivering contracts to several big developments – Doosan Heavy Industries & Construction was awarded an OEM contract for the design, manufacture, and supply of a pressuriser for the Cadarache ITER Nuclear Fusion plant in France. South Korea re-entering the sector could do great things for the market.
By Joanne Sivanathan, Energy Analyst, EIC
The nuclear phase-out
Former President Moon Jae-In’s nuclear phase-out policy included suspending construction of Shin Kori Nuclear Power Plant (Units 5 and 6). Korea Hydro & Nuclear Power quoted US$88m to maintain the equipment and construction site during the suspension. The postponement was quickly overturned when a civil jury voted 58.5% in favour for construction to be resumed. However, this did not deter Moon, as he soon went on to cancel the scheduled addition of two new reactors at Shin Hanul (Units 3 and 4) and shutdown Kori 1 and Wolseong 1 during his term as president. In the five years of his rule, nuclear energy dropped from almost 30% to 26.5%, with a trajectory of 6% by 2050.
South Korea: Nuclear
www.the-eic.com | energy focus 37
Roy Smith, Gurobi
Can you tell us a bit about Gurobi?
Since our founding in 2008, Gurobi has helped thousands of companies solve their most complex business challenges. By presenting a business problem as a mathematical model, customers can use Gurobi’s decisionintelligence technology to quickly find the best solution.
We’ve worked with companies of all types – from Air France and America’s National Football League to big oil supermajors –to help them optimise their decisionmaking. They use Gurobi to explore the trillions of paths they could take in pursuit of their business goals, given their constraints, and then quickly identify the optimal course of action.
What kind of work does Gurobi do?
Continuous optimisation has been around in the energy industry for more than 50 years, but what Gurobi provides is discrete optimisation. With discrete optimisation, you can face complex, mutually exclusive decisions (such as, “How can our organisation maximise production while minimising environmental impact?”) and identify the best way to achieve both of those goals.
Discrete optimisation is also quite different from machine learning. For example, there’s the old saying, “All roads lead to Rome.” Where machine learning can only predict what you may encounter along your journey (such as weather, traffic and engine trouble), Gurobi can take everything into
Account Director for Europe Oil & Gas
Roy Smith takes Energy Focus behind the scenes at Gurobi
consideration, as well as your goals (such as the fastest, cheapest and safest route) and constraints (such as time, budget and speed limits), and identify the single best road you should take. It can even re-route you as soon as anything changes.
I consider Gurobi to be the ‘digital twin’ for business problems. It allows you to test different business scenarios and what-ifs ahead of time or in real-time, so you’re ready for whatever comes your way.
How does Gurobi help energy companies?
One example of Gurobi’s success in
the energy industry can be seen in our work with one of the largest producers of oil and gas in the world. From exploration and refining to energy generation and trading, this producer handles it all – and it uses Gurobi to optimise supply chain networks for liquid fuels, transportation, refineries and quality constraints; conduct long-term investment planning; identify the optimal way to use, acquire, and sell its utilities in all of its refineries; and schedule and allocate the ships and helicopters it will need for the following year. As a result, this producer has been able to increase output and revenue, improve its planning agility and advance its ability to meet demand.
What’s your favourite part about working at Gurobi?
Personally, I love being able to have great discussions with so many talented people who really know what they’re talking about and can get things done. However, I think my favourite part is hearing about how our technology has helped so many businesses to make better decisions, and seeing the far-reaching effects of those decisions.
It’s an honour that major companies trust us with their most pressing business problems, and there’s nothing more rewarding than seeing our partnerships lead to meaningful change in the world.
38 energy focus | www.the-eic.com EIC Member Focus
Smith, Gurobi MY BUSINESS
The Gurobi team
Don’t miss out on the energy event of the season as we come together in style in London. The evening will be hosted by Stephen Mangan.
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