ONGC CMD Subhash Kumar flagged the need for a collaborative approach among national oil companies for an effective transformation of the global Oil & Gas industry. Speaking at the fourth Plenary session of the 23rd World Petroleum Congress (WPC) at Houston (USA) on 7 December 2021, Mr. Kumar said that Oil & Gas will remain a key element in energy for decades to come, albeit with lower emissions.
The fourth Plenary session was on ‘Transformation in the Oil & Gas Business’, and was participated by CEOs of four national oil companies of the world. Apart from ONGC CMD, Repsol (Spain) CEO Josu Jon Imaz, Korea National Oil Corporation President & CEO Dong Sub Kim and National Oil Corporation of Kenya CEO Leparan Gideon Morintat.
ONGC CMD Subhash Kumar during his presentation in the WPC Plenary. Seated on the dais (from left) National Oil Corporation of Kenya
CEO Leparan Gideon Morintat, Korea National Oil Corporation President & CEO Dong Sub Kim and Repsol CEO Josu Jon Imaz
“The transformation in Upstream means producing more barrels with lower emissions, with a more sustainable and efficient ways of oil-field operations,” said Mr. Kumar. “This transformation would need new strategies, new performance metrics, new collaborations and new financing models.”
Presenting the long-term global energy scenario, he hypothesized that Oil & Gas would contribute to around 50 per cent of world energy basket till 2040, and may be even beyond that. The proportion may be different in different parts of the world.
However, “Oil & Gas industry will face real risks associated with accelerated low carbon scenario.” He explained that exploration would be impacted as Yet-To-Find resources won’t be substantively value-accreting. “Asset development would be impacted and green-field projects would starve for capex. Oil economies could face capital crunch. Talking of upstream, new investment cycle will be focused on portfolio transformation and de-carbonization as E&P players seek to achieve emission reduction targets.”
The fact-studded presentation was appreciated by the audience
“Since 2014, investments have come down. Lower investments in exploration would impact production and other parts of the chain with a lag of 2-3 years. The challenge for the Industry would be to sustain their returns while creating new investor propositions, with a combination of legacy business and low-carbon projects. With innovative thinking, this challenge can well be an opportunity for the industry.”
Putting in a substantial amount of data in his presentation, Mr. Kumar said that the evolving narrative should be Development and Climate Change instead of Development versus Climate Change. “We all need to come together with our collective capabilities and strengthen this narrative.”
“As far as India is concerned, our Prime Minister has pitched for heavy investments in renewables. He has made bold commitments of bringing down carbon intensity to below 45 per cent by 2040 and to become Net Zero by 2070.”
Asking the Oil & Gas industry to come together to tackle this Climate Change challenge, the ONGC CMD said, “the global Oil & Gas Industry needs a central repository of best practices on a voluntary basis. With a common platform to coordinate this transition across the borders, we can collectively bring down the cost of this transition to economic levels.”
Earlier, Repsol CEO Josu Jon Imaz said that with the extensive talent available in the Oil & Gas industry, the industry is going to be a part of the solution in this Climate Change scenario. “Like Repsol, operators need to have an inclusive approach and leverage knowledge for de-carbonization.”
Korea National Oil Corporation President & CEO Dong Sub Kim said changes in Earth has been cyclic for a million years, irrespective of carbon-dioxide. Saying that the Oil & Gas business has always been transforming, he added that, “People, Leadership and Culture are vital for the transformation in the Oil & Gas business”.